At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
CoreLogic head of research, Tim Lawless comments:
Despite the housing downturn gathering some pace in September, with CoreLogic’s national index recording the largest fall in dwelling values over any three month period since late 2011, we don’t expect the RBA to throw a lifeline to the housing market in the form of lower interest rates. Considering dwelling values comprise around 55% of household wealth and about 70% of household debt, the RBA has a keen interest in the housing markets performance.
Cutting the cash rate would likely provide further support to economic conditions, but could also risk refuelling growth in housing prices, as was the case in 2016 when the cash rate was cut by 50 basis points between May and August.
Despite the recent subtle rise in mortgage rates, indebted home owners continue to benefit from the lowest mortgage rates since the 1960’s. Although we expect housing values to drift lower, such low mortgage rates, together with population growth and relatively strong economic conditions should help to keep a floor under housing prices.
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