When the Reserve Bank board met in early February, the national cash rate was left at 2.5% for the sixth month in a row.
Whilst this decision is based on various economic factors both locally and globally, the outcome of a steady interest rate should ensure that Victoria’s real estate market remains stable, in an important period for the industry.
Mr Raimondo from the Real Estate Institute of Victoria commented that the decision to leave the rate unchanged will continue to assist home buyers in the market in this first quarter of the year. “We finally saw the effects of last year’s low interest rates in the final few months of 2013 – with an increase in Melbourne’s median house price in the December quarter just gone,” he said.
Mr Raimondo also remarked that keeping interest rates on hold at this time will continue to prolong favourable borrowing conditions that buyers are currently experiencing. “While it is yet to be seen whether the Reserve Bank will move on interest rates later this year, the decision enables home buyers and investors to act with greater certainty as 2014 gets underway.”
Mortgage rates are still at record low levels with the standard variable rate at all of the big banks hovering around 5-5.5%. Below a table showing how interest rates have fared over the past 50 years. The rate is taken from January of each year:
Year
Rate
1964
5.0%
1974
8.38%
1984
11.50%
1994
8.75%
2004
7.04%
2014
5.23%
(data courtesy of the RBA)