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RBA Holds Rates for Longest Period in Seven Years

By Tim Marsh

At its first meeting of 2014 the Reserve Bank of Australia (RBA) decided to leave the cash rate at 2.50 per cent for the sixth consecutive month, the longest period of interest rate stability since 2007.

Loan Market Director Mark De Martino said the decision to leave rates on hold since August last year, has given the home finance industry the stability to encourage buyers and sellers back to the market.

“Homeowners and buyers of this generation haven’t likely seen a period of interest rates this low for this long. It’s been a very unique time period,” Mr De Martino said.

Mr De Martino said it was still unclear if the next rate cut would be up or down as lenders continued to adjust their fixed rate products in opposite directions.

“For five consecutive meetings the RBA has made the right call by watching past rate cuts bring confidence back into the market. As inflation and unemployment numbers continue to make cases for rate movements in either direction, it’s not easy to predict where rates may head next.”

Mr De Martino said that even with six months of rate stability, there was a lots of competition in the marketplace with lenders using other loan products and features to attract and save homeowners money.

“There’s lots of posturing with fixed rates at the moment and with the daily fluctuations of the Aussie dollar, we’re seeing competition open up with lenders trying to correctly predict when this interest rate cycle will bottom out,” Mr De Martino said.

Other reading
See what leading economists think about whether you should fix your rates now, by clicking here.

Article first appeared on, and is courtesy of,, by Paul Smith.

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