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Good Decision By RBA, Says Loan Market Group

By Nikkita Barlow

The Reserve Bank of Australia (RBA) has made a sound decision to keep official interest rates on hold for the time being, says leading mortgage broker Loan Market Group.

Loan Market Group Executive Chairman Sam White said keeping the cash rate at 3.75 per cent would allow the RBA to further examine the impact of the three rate rises made late last year which lifted the cash rate from a near 50-year low of 3.0 per cent.

“I think it has been a good decision to leave it on hold and wait for more evidence,” Mr White said.

“What they’re trying to do is assess the impact of the previous rises. Australians are also coming back from holidays. The RBA will also be assessing how much credit card debt has built up over the festive season.”

Mr White said most mortgage holders would nonetheless be preparing for rates to rise further during the year despite today’s reprieve.

“I think most mortgage holders are expecting a tightening of the cycle and for more rate rises to come this year, possibly as much as 0.5 per cent above the current level,” he said.

Mr White said the property market should stay solid during 2010 despite the expectation of more rate rises.

“It augers well for a solid, sustainable market,” he said.

“Investors have been coming back into the market over the last three or four months and they have been attracted by very low vacancy rates.”

– Loan Market

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