Positive signs for Australian borrowers

Positive signs for Australian borrowers

The Housing Industry Association (HIA) has commented on Australia's record-low interest rate, a boon to those seeking home mortgages across the country.

On July 1, the Reserve Bank of Australia (RBA) elected to maintain the official cash rate at 2.5 per cent, a figure it's rested at since August last year.

According to RBA Governor Glenn Stevens, ongoing stability is predicted. Meanwhile, the HIA noted in a July 1 statement the decision means the country is seeing the "longest period of interest rate stability in nearly a decade".

With further stability tipped by monetary policy decision makers and the potential for a resurgence in the residential renovations market, the low rate is largely seen as a positive.

"The RBA have been saying for some months now that the economy requires stable interest rates. Consequently, today's decision is in line with our expectations," explained Shane Garrett, senior economist at the HIA.

"We expect that rates will remain unchanged over the next number of months at least as unemployment remains too high and economic growth is below trend."

Mr Garrett elaborated on the impact the low cash rate has had in the last 12 months, notably "fuel[ing] growth in the most interest rate-sensitive sectors of the economy".

The senior economist estimated that growth in new dwelling starts for the 2013/14 market will sit around the 10 per cent mark, making growth in the sector reach one of the largest yearly totals on record.

Furthermore, low interest rates have assisted growth in the renovations market. They will assist new home building activity, which will help alleviate the country's housing shortage, Mr Garrett explained.

Image credit: SteveTaint

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