Interest rates to boost economy: RBA

It’s been over a year that the interest rates have been pegged to a record low 2.5%, yet Reserve Bank Governor Glenn Stevens is convinced that investment levels have yet to reach their full potential, calling the current levels “below par” at a recent announcement at the  House of Representatives Standing Committee on Economics.

Banks have been more than willing to lend – a positive indication that more activity is expected from the property sector. Despite a high unemployment rate, the current net worth of households have increased by $120,000 over the past 2 years. Mr. Stevens describes the housing sector “strong” with “robust prices” making it an ideal investment choice.

Read more about this on the Adviser website.

RBA open to more rate cuts

The Reserve Bank of Australia has recently opened their doors to the possibility of further rate cuts to improve the economy, according to Deputy Governor Philip Lowe in a recent speaking engagement for Australian economists.

The RBA has seen the desired effects on the economy, while keeping the interest rate at 2.5%, but will be willing to cut it further if the economy needed stimulus. The property market has been growing steadily at the current rates and the construction sector is expected to follow suit.

Read more about this on the Your Mortgage website.

Property Market to favour First Homebuyers: RBA

First Homebuyers patience has been wearing thin, as the Reserve Bank suggests them to remain patient with the current boom in the property market. A recent report from the Australian Bureau of Statistics show that First Homebuyers for March barely increased by just 0.1% at 12.6% from the previous month.

The RBA’s head of Financial Stability Dr Luci Ells believes that the chance of experiencing another property boom is very slim, citing home value increases over incomes. She is convinced that the property cycle will eventually create a situation favorable for First Homebuyers. For the 12 months leading to April, home values have increased by 11.5%.

Read more about this on the website.

Australian debt to income ratio alarming: RBA

The ratio of household debt to disposable income has reached alarming numbers, according to the Reserve Bank after data showed it at a three year high of 148.8% last December. The numbers are still well below the GFC peak, where the ratio has reached above 150%.

With the return of cheap and affordable loans, analysts are worried as to how much households can take, as debt in line with income is predicted to rise by about 5% per year.

Read more about this on the Sydney Morning Herald website.