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REINSW, RateCity and Accrue Real Estate review RBA rate decision

REINSW's Malcom Gunning
1 September 2015 Sydney: The Reserve Bank of Australia has decided to keep interest rates on hold at 2.00 per cent at its September board meeting.

REINSW President Malcolm Gunning said we are seeing the first signs of the property market starting to stabilise.

“Clearance rates are beginning to come off and prices are starting to steady,” Mr Gunning said.

“The public are listening to the Reserve Bank Governor and the APRA recommendations, which have seen an increase to deposits for investors, higher interest rates and affordability tests, are filtering through.”

The official cash rate has fallen 275 basis points since November 2011, with the RBA cutting interest rates twice in 2013 in May and August and at its February and May meetings this year.

The RBA will next meet on Tuesday, 6 October 2015.

In Melbourne, investment property specialist Jeff Grochowski, Managing Director of Accrue Real Estate said today,

"The current economic environment is consistent with the budget and reserve bank forecasts and with the recent drop in the Aussie dollar there should be no need to increase interest rates for some a while."

"APRA has successfully placed pressure on the banks to balance their lending portfolios which has resulted in investment loan approvals having dropped causing the desired effect of having the banks’ loan books in balance."

Following today's decision by the Reserve Bank board to leave interest rates unchanged at 2 percent, new research from RateCity shows that the gap between investor and owner-occupier home loan rates is widening.

While in June the difference between owner-occupier and investor home loan rates was only 0.02 percentage points, the margin is now as high as 0.50 percentage points.

On one hand, lenders are tightening criteria on loans to property investors and making it more expensive to borrow. The flipside of that is that owner-occupiers are being offered sharper deals in some cases.

RateCity data shows that 55 lenders have introduced differential pricing on mortgages in recent months, including the major banks (see graph), which have increased investor rates by up to 0.48 percentage points and cut owner-occupier rates by as much as 0.39 percentage points since 29 June this year.

Contributors to this article are Helen Hull. Laine Lister and Greg Rogers

MV - Another article published in collaboration with MultiViw

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