RBA Update December 2016

By Matthew Kenworthy | Reserve Bank News

In the final meeting of 2016 the Reserve Bank has left interest rates on hold. This makes it 4 months in a row with no change to the cash rate.

The first meeting for 2017 is scheduled for Tuesday Feburary 7.

What Comments Did They Make?

Government bond yields have risen further with the adjustment having been orderly. Funding costs for some borrowers have also risen, but remain low.

Some lenders have recently started to raise interest rates blaming an increase in funding costs. This includes both NAB & Westpac increasing rates for those with Investment Lending. Westpac also increased their rates on Owner-Occupied lending with Interest Only repayments.

Conditions in the housing market have strengthened overall, although they vary considerably around the country. … Growth in rents is the slowest for some decades.

Whilst Sydney & Melbourne are still growing, the Perth property market is not as strong as it was. REIWA notes that the average number of days to lease a rental is currently at 53 days. Vacant rates in October were 6.9%.

Inflation remains below most central banks’ targets, although headline inflation rates have increased recently. Globally, the outlook for inflation is more balanced than it has been for some time.

Some bank economists are tipping that the Federal Reserve may increase rates at their December 14 meeting. The Federal Reserve (in the United States) functions similarly to the Reserve Bank in Australia. The flow on effects of such an increase may cause the RBA to start looking at increasing rates in 2017.

Full notes from the meeting can be found on the RBA Website.

About the Author

Matthew Kenworthy is a specialist in all aspects of Residential & Commercial Finance. He can assist all borrowers from First Home Buyers to Property Investors with Large Portfolios.