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RBA rate announcement - September 2015

The Reserve Bank of Australia has delivered the result of its monthly board meeting.

As expected, board members decided to leave the cash rate at a record-low 2 per cent, where it has been since May.

August housing market data from CoreLogic RP Data together with recent data on investor credit growth would have been welcome news to the Reserve Bank when they deliberated on the cash rate setting today.

The rate of capital gain eased across the housing market in August; after capital city dwelling values increased by more than two per cent in both June and July, it was reassuring to see that capital city dwelling values grew by a much more sustainable 0.3 per cent in August, according to CoreLogic RP Data head of research Tim Lawless.

“Additionally, recent credit data released by the Reserve Bank showed the annual pace of growth in investment credit slipped from a recent annual high of 11.1 per cent to reduce back to 10.8 per cent in July,” Mr Lawless said.

“The slower month of housing data may indicate that the housing boom in Sydney and Melbourne is starting to slow and investment lending is starting to moderate in line with APRA guidelines.”

Meanwhile, LJ Hooker Home Loans chief operations officer Paul O’Regan said today’s announcement shows confidence in both local and international economies despite a turbulent month for the stock market.

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Slower property price growth, declining consumer sentiment and fall-out from the Chinese economy has made a reduction probable in the coming months.

“The Reserve Bank has shown in the past that it likes to sit on any kind of new events a bit longer than what is expected, however, the market is moving towards a cut,’’ Mr O’Regan said.

“It’s a positive message today because it signals that they think the world is in a good place and it can be seen as a sign of confidence,” he said.

“If they cut when the market didn’t expect them to then that would be a problem, but now it is something that is highly anticipated by the end of the year.’’

Mr O’Regan doesn’t believe lowering the cash rate will further fuel Sydney and Melbourne house prices.

Recent sales figures and auction clearance rates suggest some market softening, with listings slowly increasing as vendors try to bid to beat the traditional spring rush, he said.

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