At its monthly meeting in Sydney, the Reserve Bank of Australia elected to reduce the official cash rate by twenty-five basis points to 3.25 per cent. This decision was welcomed by Century 21 and we expect that it will help to further stimulate the national residential property market at a time when the national market is already showing signs of recovery.
Following three consecutive rate holds, the Reserve Bank's latest decision brings official interest rates to their lowest level in three years.
Charles Tarbey, Chairman of Century 21 Australasia, said that the decision should provide relief for many home owners with mortgages and further encourage would-be purchasers to enter the housing market – should the banks pass on the savings."
The Reserve Bank cited Australia's softening labour market and high exchange rate, as well as weakening global economic growth and a sooner than expected end to the resource investment boom as key reasons behind the decision.
"The Board judged that, on the back of international developments, the growth outlook for next year looked a little weaker, while inflation was expected to be consistent with the target," said RBA Governor Glenn Stevens in his official statement following the decision.
"The Board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative."
The Reserve Bank's decision comes off the back of recently released RP Data-Rismark figures showing that capital city dwelling values rose by 1.4 per cent over September – the largest month-on-month increase capital city property markets have recorded in more than two-and-a-half years.
The Reserve Bank will no doubt be keeping a close eye on how the major banks respond to its latest move. The big four banks – Westpac, Commonwealth Bank, ANZ Banking Group and National Australia Bank – have yet to reduce their lending rates.
For more information about the residential property market in your areas of interest, please feel free to stop by your local Century 21 Real Estate office for expert, clear advice. Additionally, if you would like to speak to a mortgage professional about the impact of this rate cut on your mortgage, or to find out more about suitable loan packages for your circumstances, please contact Century 21 Home Loans.