Australia’s interest rate remains at a record low of 0.10%

Despite the continued rapid rise in house prices, the Reserve Bank of Australia (RBA) has decided to keep the interest rate on hold for the eleventh month in a row.

It also said that it’ll hold its quantitative easing program of purchasing $4 billion a week of government debt steady.

But that makes it only more likely that the RBA will be keen to see action from another direction to help ease the pressure in the real estate market.

The Commonwealth Bank has already done a little of that off their own bat because, from the bank’s perspective, they don’t want to lend money to people who can’t repay them.

Banks don’t want to cut back on their business, but with prices rising so high, they don’t want to run the risk of losing money down the track if people can’t afford to service their mortgages.

Nationally, monthly house price growth is at 1.5%. That rate of growth might continue to fall and eventually ease out, however, as the supply of new listings on the market increases, and the volume of new dwellings built grows.

The bank is not set to increase the cash rate until actual inflation is sustainably within 2 to 3 percent target range. The central scenario for the current economy will not be met before 2024.

If you have any concerns or questions regarding the continued rise in housing prices and its impact on your business, please do not hesitate to contact us on 4638 5300 to talk anything from budget and cash flow forecasting to finance and lending strategies.

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