Etairos Accounting and Finance
we guide you to a better future
Etairos Accounting and Finance
Strength in Numbers
Interested to know how an SMSF
can work for your future?
Are you looking for something better from your
Accounting and Finance experience?

Interest rates to rise but not for a while: RBA

Added on by

Despite optimistic comments that suggest the high Australian dollar is ­increasingly the main impediment to mortgage rates, the Reserve Bank of Australia believes they are more like to rise than fall. 

Speaking in Melbourne at his six-monthly testimony before a key parlia­mentary committee, RBA Governor Philip Lowe said he "didn’t want to dissuade” anybody from the idea that, gradually, "the average level of rates would be higher”. The current market pricing implies a greater probability of a rate rise than a rate reduction. It also implies that the next move in interest rates is a long way out. I think that they are both reasonable assumptions, that the next rate move will be up, rather than down, but it will not be for some time,” he said.

The RBA has held the cash rate at a record low of 1.5 per cent for more than 12 months, but investors have pencilled in one ­interest rate increase with 50 per cent probability before May. Financial regulators were broadly happy with developments in the home lending market, which has remained strong in terms of both price growth in Sydney and Melbourne and lending and building approvals.

"Loan growth of about 6 to 7 per cent is about right, and lending standards have improved,” Mr Lowe said. When asked whether further efforts were needed to slow lending growth, especially to investors. Mr Lowe responded, "we have done enough”. In the past year, the Australian Prudential Regulation Authority has limited the value of new interest-only loans to 30 per cent of banks’ new loans, additional to measures to cap growth of investor loans at 10 per cent.

Mr Lowe then went on to urge the ­government to sort out the nat­ion’s power impasse, which has ­throttled investment in coal and gas power stations and seen ­double-digit electricity price ­increases.

"Some businesses are saying: well, we’re not sure what the ­future price of electricity is so we’ll wait to invest,” Mr Lowe told the committee. "The higher prices are also affecting household budgets, especially those with lower incomes,” he said, foreshadowing a jump in the consumer price index next month. "It would help if we had a strong electricity generation sector. I couldn’t disagree with the proposition that providing certainty about structure would be useful for Australia"

(Source: The Australian, 13 August 2017)

Latest from the blog

7 Tips for first home buyers 12 February 2018

  Buying your first property can be an overwhelming process. First time borrowers often face uncertainty over how to apply for a home loan, how... READ MORE

9 Tips for getting started in property investment 08 February 2018

When it comes to building a retirement nest egg for the future, property is still regarded as one of the safest long-term investments. While some... READ MORE

RBA keeps rates on hold again 06 February 2018

  The Reserve Bank of Australia (RBA) has left the official cash rate on hold at a record low 1.5 per cent at its first meeting... READ MORE

“Etairos are prepared to go above and beyond to make sure you are taken care of and allow you to get on with running your business. their team is fast, accurate and professional so in the most important part of anyone's business, finance and accounting, you know you are in safe hands. ” more testimonials

Clipper Motor Yachts, Coomera

Call  1300 55 22 30  now