RBA announces rate decision - May 2014

The RBA announced at 2.30pm today it will be keeping the cash rate on hold at 2.5 per cent.

“The ongoing low interest rate environment is likely to encourage higher levels of housing market activity which provides a fantastic multiplier for the Australian economy,” said RP Data’s national research director Tim Lawless.

“However we anticipate that natural affordability barriers and low rental yields will continue to dampen the exuberance that has been very much evident in Sydney and Melbourne.”

Despite a steady outlook for most of 2014, loan comparison website finder.com.au has warned home loan interest rates may still increase.

“Our monthly survey of leading experts suggests that it will be at least four months before we will see any movement to the cash rate by the Reserve Bank. However, that doesn’t mean your variable home loan rate won’t change,” said finder.com.au’s Michelle Hutchinson.

“We found that five lenders increased their rates on seven home loans by up to 0.10 percentage points this year, including Citibank, Homeloans, HSBC, Loans.com.au and Westpac.

“We’ve also seen seven lenders drop 20 home loans this year by as much as 0.17 percentage points.”