The Reserve Bank of Australia kept interest rates on hold at 1.50 per cent at its July 2017 board meeting yesterday.
Here’s what some industry players had to say following the RBA’s decision:
John Cunningham, REINSW President
“It comes at little surprise that the RBA has decided to keep a neutral position for the 10th meeting in a row. We believe that this will continue into the second half of the year, but we may see interest rates rise as early as October.
“It is important that those seeking to enter the property market and those already servicing a mortgage think carefully about the effects that several interest rate rises will have on their ability to service a mortgage.”
Peter Hanscomb, Belle Property CEO
“Rate stability is important to maintain our economic position as a country, however, I do believe it will be necessary from a long-term viewpoint to see interest rate increases.
“In a lot of market places, I believe initial interest rate increases will have very little impact. The biggest drivers of mortgage stress still go back to loss of job, divorce or a change in health. They are far bigger factors for the majority of Australians, but that, of course, depends on the percentage and the type of debt they hold.
“The stress of interest rate rises will likely affect people who are too overly geared. However, if there is not strength in the economy, then there is more risk of people losing their job and that’s where homeowners will come into the greatest risk.”
Leanne Pilkington, Laing+Simmons Managing Director
Ms Pilkington says the RBA’s decision to leave rates on hold was the right one and that a steady interest rate environment will continue to be crucial as the country – and mortgage holders – navigate various economic and political uncertainties.
“In the past week we’ve read reports that rates could move higher sooner rather than later, and that compounding rises over a relatively short period may materialise. This could jeopardise the safe landing that the Treasurer has prioritised,” Ms Pilkington said.
“A cautious approach should be prioritised if a whole host of Australians are to avoid mortgage repayment shock,” she said.
Ms Pilkington says that, while the performance of suburban markets in capital cities continues to fluctuate in accordance with their individual drivers, it’s apparent the market as a whole has shifted to a flatter price growth point in the cycle.
But that doesn’t mean buying for the first time is any easier. Nor does it alleviate the pressure on mortgage holders.
“The outlook for prices is more complex than simply saying they will rise or fall. Some parts of the market are likely to remain relatively stable, like family homes, while others will certainly fall, including some apartments in areas where new supply has been concentrated,” Ms Pilkington says.
Tim Reardon, Housing Industry Association Principal Economist
“Our forecast remains that there will be no further reduction to the Official Cash Rate (OCR) in 2017. Comments issued by the Reserve Bank Governor today highlight that housing prices have been rising briskly in some markets and declining in others. These patchy outcomes are consistent with the easing of conditions in the housing market.
The pressures on the RBA to respond to developments in the housing market have eased as the major mortgage lenders moved to increase interest rates on a number of riskier mortgage lending products. Furthermore, the latest dwelling price figures showing that the market for established properties in the east coast capital cities may be cooling is likely to provide additional comfort.