RBA Update February 2017

By Matthew Kenworthy | Reserve Bank News

In the first meeting of 2017 the Reserve Bank has left interest rates on hold. This brings the streak of no rate changes to 6 months.

The next meeting is scheduled for Tuesday March 7.

What Comments Did They Make?

Interest rates have increased in the United States and there is no longer an expectation of further monetary easing in other major economies. Financial markets have been functioning effectively and stock markets have mostly risen.

Given interest rates are not expected to drop further overseas, it appears more likely the next move is up rather than down.

Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent, with the rise in underlying inflation expected to be a bit more gradual.

Inflation is currently around 1.5%. If it was to rise above the 2% mark this would be the most likely time for the RBA to pull the trigger on a rate increase.

Borrowing for housing has picked up a little, with stronger demand by investors. With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments.

A number of banks recently have placed further restrictions on borrowing to property investors. While many are still lending there are few options than there were twelve months ago. Those borrowing for property investment should also expect to pay a higher interest rate.

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.