Market Report Reserve Bank says NO to interest rate increase

When the Reserve Bank of Australia met on the 1^st Tuesday of June, most experts and economists were confident that interest rates would remain on hold and they were 100% correct. Interest rates have not increased for 7 consecutive months and the last increase was on the 2nd of November, Melbourne Cup day 2010. The current cash rate is 4.75%.

 This does not mean to say that interest rates won´t increase towards the end of the year but at the moment the Reserve Bank believes that most households are not ready right now for further increases. Most families are adjusting to increased utilities costs and as a result of this the retail sector has definitely been suffering.

 In the world of real estate demand for good quality properties up to $1.5 million is still very strong. As a result of that over the past 2 months the N G Farah team has sold just under 100 properties in the South East region of Sydney, in areas such as Maroubra, Botany, Mascot and Eastlakes still in demand.

 It is unlikely interest rates will increase during Winter especially due to the fact that application for home loans are down by 12% and lending ratios are at the lowest level since 1999.

The major banks will have to remain competitive in order to attract new business and the best and most effective way of doing that is keeping their interest rates on hold.

This has got to be seen as good news for the home buyers in the marketplace. Mortgage holders have adjusted to interest rate increases. The Reserve Bank of Australia has implemented over the last 12 months however further increases in the short term may have a negative effect on confidence which could flow through to the property market.

The Australian Reserve Bank is the envy of most Western economies. Governor Glenn Stevens, the head of the Reserve Bank has done an excellent job in steering the Australian economy through a possible recession.