The central bank today opted to keep the official cash rate on hold at 2.5 per cent.
This decision came as no surprise, with the board previously indicating it expects a “period of stability” in interest rates.
RP Data national research director Tim Lawless said the board would be happy with the effects of current monetary policy settings on the domestic economy, with a strong property market now driving increased investment in dwelling construction.
“More housing market activity has translated to greater developer confidence and a consistent upwards trend in new building approvals,” he said.
Key housing market metrics produced by RP Data continue to indicate buyer demand remains strong across the housing market.
“Auction clearance rates have consistently been around the high 70 per cent mark since mid-February and mortgage demand, as measured by activity across the RP Data valuation platforms, was at record daily averages during February,” according to Mr Lawless.
“As long as mortgage rates remain low we would expect housing market conditions to remain in positive growth territory, at least in trend terms,” he added.
Today’s decision means the cash rate has now remained unchanged at 2.5 per cent since August of last year.
Loan Market director Mark De Martino said this prolonged period of interest rate stability has helped boost homeowner and buyer confidence and caused lenders to compete with one another with record low interest rates.
With the cash rate now likely to remain unchanged for some months and lenders continuing to compete on price, Mr De Martino predicts the property market will continue its recent strong run.
“In the past several months, homeowners have enjoyed the lowest cash rate of this generation and with lenders now dropping fixed interest rate to 20-year lows, there’s no reason confidence shouldn’t continue to build for homeowners and buyers,” he said.
According to Mr De Martino, enquiries about fixed rates have remained high so far this year, accounting for 37 per cent of all enquiries at Loan Market, compared to 24 per cent last year.
Source: Real Estate Business