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RBA Rates Update July 2021

06.07.21 | Marc Barlow | Reserve Bank Announcements

RBA keeps rates ultra-low as the economy strengthens

Today’s monthly RBA board meeting opted again to maintain cash rates at 0.1%, as June figures show the housing market continues to surge while the economy powers ahead.    

The RBA has now kept interest rates at this historic low since November 2020, as it aims to boost Australia’s economy, which is rebounding strongly after the shock of last year.  

It reiterated that it will not increase the cash rate until actual inflation is sustainably within the 2–3% target range. 

‘The Bank’s central scenario for the economy is that this condition will not be met before 2024,’ the RBA said after today’s monthly board meeting. 

‘The economic recovery in Australia is stronger than earlier expected and is forecast to continue. The outlook for investment has improved and household and business balance sheets are generally in good shape,’ the RBA added.  

These are rosy times for the property market. Last month, national home values increased by 1.9% with all capital cities seeing an uptick for June. Hobart (3%) and Sydney (2.6%) led the way while Melbourne was up 1.5%.  

In further good news, the national home values index rose a stunning 13.5% for the just-ended financial year. Houses rose 15.6% compared to unit prices, which were up 6.8%.  

Attractive rates, low levels of stock coming onto the market, and strong demand are stoking Australia’s property market surge. 

‘Housing markets have continued to strengthen, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, including first-home buyers,’ the RBA noted.  

‘There has also been increased borrowing by investors.  

‘Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.’ 

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