Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

RBA stability review expected to flag housing concerns

The Reserve Bank of Australia’s six-monthly Financial Stability Review is expected to highlight again the risks in the household sector associated with rapid house price gains, according to a leading economist.

The RBA report, due to be released tomorrow, is likely to remark that, on the whole, the Australian financial system remains “in good shape”, according to AMP Capital chief economist Shane Oliver.

“The minutes from the last RBA board meeting signalled a clear bias towards cutting rates again.

Advertisement
Advertisement

“However, while another easing was considered at the last meeting it was clear that the Reserve was in [no] rush, deciding to allow more time for the economy to adjust to the last cut and to await more data on the economy.

“This could well carry over to the April meeting meaning that the next cut may not come till May.

“A speech by governor Stevens did nothing to alter the view that rates will fall further but that the RBA is not in a hurry,” Mr Oliver said.

The last stability review, published by the central bank on 24 September 2014, made an impact after it included the comment that the composition of housing and mortgage markets “is becoming unbalanced”.

“This has been most evident in the current strength of investor activity in the housing market, and in its concentration in Sydney and Melbourne,” it said.

“The apparent increase in the use of interest-only loans by both owner-occupiers and investors might also be consistent with increasingly speculative motives behind current housing demand.”

The increasing household appetite for risk over the past year has been fuelled by low interest rates, inflated house prices and strong price competition among lenders, the RBA said.

“Accordingly, household credit growth has picked up, almost entirely driven by investor housing credit, which is growing at its fastest pace since late 2007,” it said.

The RBA stressed that the increase in household risk appetite is most evident in the continued strength of investor activity in the housing market, particularly in Sydney and Melbourne.

 

RBA stability review expected to flag housing concerns
mortgagebusiness

Latest News

The federal government has committed an additional $130 billion in support to protect jobs threatened by the economic fallout from the cor...

New government-led interventions in the housing market in response to the coronavirus outbreak are set to further hinder transaction activit...

The number of owners withdrawing their property from auction soared to 40 per cent last week, following the introduction of a ban on auction...

FROM THE WEB
podcast

LATEST PODCAST: Further relief for SMEs and borrowers

Do you think Australia will move to quantitative easing this year?

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Mortgage Business.

Read more

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.