RBA tipped to keep home loan rates on hold

The Reserve Bank of Australia is widely expected to keep home loan rates on hold when it meets in Adelaide tomorrow.

While local economic data shows the Australian economy has grown at the fastest pace in three years, looming economic results abroad have indicated that some countries may even be at risk of double dipping into recession.

I would expect the RBA to leave the official cash rate at 4.5 per cent.

Housing finance approvals have fallen in 10 out of the past 12 months, as the stimulus driven surge in first home buyers has unwound.  Outside of the first home buyer segment, loan approvals to existing owner-occupiers and investors have continued to strengthen.

The RBA is still expected to lift the cash rate further in the near term to help keep household spending subdued and to ensure that the mining boom does not create an overheating problem.


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