The Reserve Bank continued to hold the cash rate at 1.5 per cent at its May meeting as the Australian economy continues to grow and the inflation rate remains under control.
The RBA observed over the last month that household borrowing, largely due to purchase housing, continues to outpace growth in income, necessitating tighter lending controls to arrest Australians’ rising levels of debt.
Continuing pressure on banks to limit interest-only loans is having an effect on the market, however properties in Eastern Seaboard cities are continuing to trade strongly with high prices and auction clearance rates.
This trend is expected to be tempered as the many apartments in Sydney, Melbourne and Brisbane, currently under construction, are completed over the next couple of years.
I believe the RBA will keep rates on hold for many months but this does not mean the major lenders will move theirs without the central bank’s direction.