RBA holds rates at June meeting
The RBA have held interest rates at a record low 0.1 per cent at the June meeting.
RBA Governor Philip Lowe noted in his meeting statement the increased borrowing by investors in the housing market.
"Housing markets have strengthened further, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers," Dr Lowe said.
"There has also been increased borrowing by investors.
"Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.
Finder's RBA Cash Rate Survey found that over three quarters of experts surveyed believe the cash rate won't rise until Q4 2022 or later.
Around 60 per cent of experts expect the cash rate to increase in 2023 or later. Just under 10 per cent believe the cash rate could increase before the end of 2021.
AMP Capital chief economist Shane Oliver said that while the economic recovery is faster than expected, the RBA’s conditions for a rate hike are still far from being met.
"The jobs market is still a long way from full employment, wages growth at 1.5% is way below the 3% plus pace necessary to sustain two to three per cent inflation and in any case inflation is still well below its target zone. So a rate hike remains some time off."
Despite market sentiment, and the RBA's steadfast view rates won't move until 2024, banks across Australia have been hiking their four-year fixed home loan rates.
According to Ratecity, at the start of the year were 32 four-year fixed rates under two per cent, including from three of the big four banks. Following BankVic's recent hike, there now isn't a single lender offering under two per cent for a four year fixed.
RateCity.com.au research director, Sally Tindall, said the pack was tightening as some lenders took some record low rates off the table, while others trimmed rates to become more competitive.
“A number of record low rates have been relegated to the history books over the last two months, as lenders took some of the lowest rates off the table,” Tindall said.
“There are now just two rates that are still at record lows – Reduce Home Loan’s variable rate at 1.77 per cent and BCU’s 1-year fixed rate at 1.67 per cent. All the other lowest rates have been hiked.
“We expect more fixed rates will rise after the RBA’s term funding facility wraps up at the end of this month and we edge closer to the next cash rate hike."
