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OtherStaff WriterTue 04 Jul 17

Opinion: Rates On Hold – And Need To Stay Low In The Near Term

iStock-496859290_620x380

The start of the new financial year sees interest rates remain steady, though murmurs persist that increases may not be too far away.

Laing+Simmons Managing Director Leanne Pilkington has warned jumping the fiscal policy gun would be risky.

Ms Pilkington said the RBA’s decision to leave rates on hold was the right one and that a steady interest rate environment will continue to be crucial as the country – and mortgage holders – navigate various economic and political uncertainties.

“In the past week we’ve read reports that rates could move higher sooner rather than later, and that compounding rises over a relatively short period may materialise,” Ms Pilkington said.

“This could jeopardise the safe-landing that the Treasurer has prioritised.

“A cautious approach should be prioritised if a whole host of Australians are to avoid mortgage repayment shock.”

Ms Pilkington said that, while the performance of suburban markets in capital cities continues to fluctuate in accordance with their individual drivers, it was apparent the market as a whole shifted to a flatter price growth point in the cycle.

“The outlook for prices is more complex than simply saying they will rise or fall,” she said.

"Some parts of the market are likely to remain relatively stable, like family homes, while others will certainly fall, including some apartments in areas where new supply has been concentrated.

“But affordability remains a challenge and accumulating a deposit remains difficult for many people looking to enter the market.

“We believe keeping rates at the current low level is justified in the short to medium term, at least until the various forecasts become reality and the effectiveness of changes to the property market can be measured.

“Changes to stamp duty for first home buyers in NSW kicked in over the weekend but it may not be until the summer months arrive that the full impact of those changes are known.”

ResidentialAustraliaFinanceSector
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"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
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Article originally posted at: https://www.theurbandeveloper.com/articles/rates-hold-stay-low-near-term