The Reserve Bank has been widely expected to keep the cash rate on hold ahead of Christmas. In this special announcement, brought to you by Legal Home Loans, find out if the cash rate has indeed been kept at its current level.
At its November meeting, the board of the Reserve Bank of Australia held the cash rate at 3.6 per cent. Today, it has left the cash rate unchanged.
In a statement, the board said that while inflation has fallen substantially since its peak in 2022, it has picked up more recently.
“The board’s judgement is that some of the recent increase in underlying inflation was due to temporary factors, and there is uncertainty about how much signal to take from the monthly CPI data, given it is a new data series. Nevertheless, the data do suggest some signs of a more broadly based pick-up in inflation, part of which may be persistent and will bear close monitoring,” it said.
“Economic activity continues to recover. Growth in private demand has strengthened, driven by both consumption and investment. Activity and prices in the housing market are also continuing to pick up. Financial conditions have eased since the beginning of the year, credit is readily available to both households and businesses, and the effects of earlier interest rate reductions are yet to flow through fully to demand, prices and wages. On the other hand, money market interest rates and government bond yields have risen more recently.
“Various indicators suggest that labour market conditions remain a little tight. The unemployment rate has risen gradually over the past year, and employment growth has slowed. However, measures of labour underutilisation remain at low rates, surveyed measures of capacity utilisation are above their long-run average and business surveys and liaison continue to suggest that a significant share of firms are experiencing difficulty sourcing labour. Wages growth, as measured by the Wage Price Index, has eased from its peak, but broader measures of wages continue to show strong growth and growth in unit labour costs remains high.”
In conversation with Lawyers Weekly, Legal Home Loans director of sales Cullen Haynes (pictured) said that today’s decision to hold the cash rate was expected, given recent inflation data; however, it will provide continued stability for borrowers.
“The current average interest rate range is approximately 4.9 per cent to 5.6 per cent. Property values have been rising at the fastest pace in more than two years, so if you’re considering purchasing a property, now is a good time to get your pre-approval in place,” he said.
“With three cash rate cuts in 2025, your borrowing power has likely improved, potentially expanding your options in the market. Having pre-approval ready ensures you can move quickly when you find the right property.”
The recently expanded Australian government 5% Deposit Scheme (formerly the Home Guarantee Scheme), Haynes continued, is adding more heat to the market.
“The program allows first home buyers to purchase with just a 5 per cent deposit and no LMI, with increased price caps and no income limits,” he said.
“Don’t forget, legal professionals can access certain market advantages that can make entering the property market more attainable and realistic for the cohort. It’s best to speak to a specialist broker for lawyers to gauge what’s best for you.”
Jerome Doraisamy is the managing editor of Lawyers Weekly and HR Leader. He is also the author of The Wellness Doctrines book series, an admitted solicitor in New South Wales, and a board director of the Minds Count Foundation.
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