RBA Cash Rate Decision July 2019

RBA Cash Rate Decision July 2019

RBA board has met on Tuesday the 2nd of July 2019 for their cash rate decision and decided to cut the cash rate by 25 points to 1%. This represents a record low cash rate for the RBA.

The easing of the monetary policy will support employment growth and provide greater confidence that inflation will remain on target in the medium term.

Growth in Housing Market

Conditions in the Sydney and Melbourne housing markets have continued to remain soft but recently the pricing has stabilised. Growth in housing credit extended to owner-occupiers and investors has stabilised.

It is not clear how much of this rate cut will be passed on by lenders if it will be a full or partial cut for mortgage lending rates. Important to note this will reduce the cost of variable loans, customers on fixed loans will not be impacted. You can read more about the refinancing process or the process or purchasing a new property.

It is yet to be seen that a rate cut would stimulate the credit and housing markets, similar to what occurred in late 2016. But APRA has suggested the idea of changing the assessment rules around new mortgages as lenders are experiencing difficulty in obtaining credit finance.

Australian Economy

The Australian economy grew below-trend at 1.8%. Increased investment in infrastructure is to provide an offset to this. Household consumption has been affected by a weakness in housing markets and a dragon low-income growth. The labour market is strong with the unemployment rate is 5.2%, though this has ticked up recently.

Inflation

Inflation across the country has been lower than expected, with target inflation for 2% by 2020. These inflation targets have been revised down from previous RBA expectations.

The RBA board made the cash rate decision to cut by 25 points to make inroads into the spare capacity in the economy. Assisting in a further reduction in unemployment and achieve the revised inflation target.

To Read More at the RBA: RBA Rate Decision or about the June decision.

Jeremy Harper is the director of hfinance. hfinance is a mortgage brokering business, to speak with a Sydney Mortgage Broker, Gold Coast Mortgage Broker or an Australian expat mortgage broker – contact by calling us on 1300 928 227 or email info@hfinance.com.au