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Greater Certainty Provided to Borrowers and New Home Buyers

 

The Reserve Bank of Australia (RBA) has announced on Tuesday that it will hold interest rates where they are at 3.60%. 

According to RBA’s statement, the decision was made to allow more time to evaluate the impact of the current rate increases and the economic outlook. 

The monthly CPI indicator suggests that inflation in Australia has peaked, and goods price inflation is expected to moderate in the coming months due to global developments and softer demand in the country.

It has taken time for the impact of 10 consecutive rate increases over the past year to be reflected in the data, but there are now clear signs that inflation is coming under control and should moderate further. 

What does this mean for homebuyers and the Australian property market at large?

Firstly, we are starting to see fixed rates on 3 and 5 year loans reduce, which indicates that banks see the current rates as the peak, or very close to it.

Secondly, as interest rates flatten over the next 6 months, it is expected that there will be a wave of pent-up demand coming back into the property market as confidence resumes. 

However, with tight supply on property, it may be challenging for buyers to find suitable homes, and prices may move too quickly for them. 

It is important to note that while interest rates may have peaked, we have also seen median property price declines reverse, with an increase of 0.6% for the month of March 2023, as reported by Corelogic.

The RBA board has stated that it will be closely monitoring developments in the global economy, trends in household spending, and the outlook for inflation and the labour market. 

This means that the RBA may revise its position on interest rates if it deems it necessary.

Overall, the decision by the RBA to hold interest rates steady is good news for homebuyers in Australia. While there may be challenges in finding suitable homes due to tight supply, the moderation of inflation should help to stabilise prices in the property market. It remains to be seen how the economy will develop in the coming months, but the RBA's decision to take a cautious approach is a positive sign for the future of the Australian property market.

 

- Daniel Peterson, CEO of iBuyNew

Published on 6th of April 2023 by Daniel Peterson
Daniel Peterson
Daniel Peterson

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