In a widely expected move, the Reserve Bank of Australia (RBA) has kept the official cash rate at 1.5% for the 25th consecutive month in September.
In his monetary policy decision statement, RBA governor Philip Lowe reiterated that the low-interest-rate environment continues to be beneficial to the Australian economy.
Lowe said Australia's unemployment rate has already dropped to 5.3%, the lowest level in almost six years. Meanwhile, inflation sat at 2%.
"Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual," Lowe said.
CoreLogic head of Research Tim Lawless said there are several factors that make it reasonable to keep interest rates on hold, one of which is the fact that lenders are starting to hike their respective mortgage rates.
"With the first of the Big Four banks announcing an out of cycle rate hike, the prospects for a higher cash rate have likely been pushed back even further; we could even see the debate for a lower cash rate becoming more prominent," he said.
However, Lawless said lenders are to remain hyper-competitive for high-quality borrowers despite the outlook for a stable cash rate.
In his view, the central bank would leave the official rates untouched until at least January 2020.
"Even with mortgage rates starting to edge higher, from a historical perspective, rates remain extremely low which will continue to support housing demand. No doubt borrowers will be applying pressure on their lenders to ensure they are on the lowest rate possible," he said.
Collections: Mortgage News
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