C&G’s Guide to the September RBA Announcement

It remains business as usual at the Reserve Bank of Australia this month as Governor Philip Lowe announced the outcome of the monthly board meeting. Interest rates will remain held at the all-time-low of 1.5%, where they have been since the last rate cut in August 2016. In today’s blog, C&G unpack what this means for real estate and the economy in general.

On Tuesday afternoon, Governor Philip Lowe announced the board’s decision to hold the official cash rate at its all-time-low of 1.5%. This week saw out-of-cycle interest rate hikes from major banks Westpac and Suncorp, which are said to be a factor in the decision to hold rates.

The board’s previous watch-and-wait approach to heated property markets in eastern capital cities appears to have paid off, as housing bubble fears ease with every property sale. Overall growth has returned to a stable level and is expected to sit at around 3%. Steady growth in employment and customer spending in retail sales also ticks boxes on the wider economy’s health check, but the worrisome drought in New South Wales and Queensland is affecting agricultural production exports.

The RBA has been waiting for a more robust level of inflation to stabilise before raising rates, but it remains sluggish at 2.1%, and isn’t showing many signs of movement.

This stasis was widely anticipated by economists, and speculation as to the future of the cash rate is now more uncertain than ever. As mortgage rates creep higher of their own accord, the prospect of a cash rate hike may become a concern.

If you’re a mortgagee, the best advice on offer from brokers is to prepare yourselves for the future. Lock in low rates with fixed periods, set aside ‘rainy day’ funds for unexpected changes to your monthly outgoings, or begin setting aside funds to repay your loan at 20 or 30 basis points higher than your current rate. This can reduce ‘rate shock’ in the event of a future rate hike.

For vendors and buyers, we’re approaching Victoria’s peak season for property sales - meaning demand is expected to spike with a surge of properties coming onto the market. Speak to Chisholm & Gamon’s sales department directly if you’re thinking of selling your property this summer, or browse our current listings if you’re ready to move on.