Rates stay low as vaccine rollout slowly gathers pace
At today’s meeting the RBA decided to keep the official cash rate at 0.10% for the fifth month in a row. The Reserve Bank also made clear that it’s not expecting to raise rates until at least 2024. Today’s statement was almost upbeat in its tone. There is a sense that perhaps the worst is behind us and that we can expect the economic recovery to continue.
In his statement, Philip Lowe noted many positives in the current outlook. Notably the global rollout of various COVID vaccines is providing some hope to global economies and although the rollout has stalled in Australia, it’s expected to pick up pace in the next few months.
The economic recovery is also coming along at a better than expected pace with unemployment levels down. In fact, employment is now back at pre-pandemic levels although still lower than the RBA would like.
The housing market continues to go from strength to strength with prices rising in most markets. Regional areas, particularly in Victoria and NSW (within commuting distance to CBDs) are performing particularly well. Low-interest rates are helping many first-home buyers enter the market while investor activity remains somewhat subdued. Given the market conditions, we can expect many investors to take advantage of tight rental markets and low-interest rates to build their property portfolios. If you are keen to review your financial opportunities, give us a call and we’ll make sure you are getting the best deals for you and your situation.
The RBA did flag the need to keep an eye on lending conditions, or in other words make sure that any potential housing price bubble is managed. It’s preferred method to do this is usually by tightening lending conditions for banks. There still is a lot of competition from banks for high-credit borrowers so it definitely pays to shop around or review your mortgage for a home loan health check.