Home-buyers ready for rates news
May 5, 2009 - 9:42AM
Home-buyers are unlikely to enjoy any further mortgage relief when the Reserve Bank of Australia announces its decision on interest rates this afternoon.
Experts are predicting the central bank's board will leave the official cash rate - which stands at 3%, the lowest since the 1960s - unchanged after last month's quarter-of-a-percentage-point cut and the March meeting's decision to keep rates on hold.
Interest rates: could they fall?
Most economists agree the RBA will not alter the official cash rate today but there is a dissenting voice, says Business Day reporter Chris Zappone.
Today's decision will follow yesterday's news that home prices slumped the most on record in the 12 months to March.
Australian Bureau of Statistics data showed 6.7% was shaved from house prices across the nation in that time, from a downwardly revised 3.9% fall in the 12 months ending December 31.
Economists are tipping board members will take a wait-and-see approach as the effects of the Federal Government's stimulus packages becomes more clear, and ahead of details of next week's federal budget.
"There have been tentative signs economies are at least stabilising," said Michael Turner from economic consultancy 4Cast. "The pace of decline has definitely slowed at most of our major trading partners.
"And the RBA has expressed the desire to observe the impact of the rate cuts they’ve already done and also the fiscal stimulus that already been applied."
Since September, the RBA has lopped 425 basis points from interest rates in a bid to keep the economy from slipping into reverse. Since then, repayments on a $400,000 mortgage have fallen by about $1000 a month.
Financial markets are pricing in a one-in-five chance of a 25-basis-point cut from the RBA today, Credit Suisse data shows.
While economists and financial markets see little chance of another cut today there is talk the key rate could come down to as low as 2% by the end of the year.
