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Rates on hold…for now

The Reserve Bank of Australia failed to surprise industry pundits today, with the board opting to leave the official cash rate on hold.

This is the second consecutive board meeting that the RBA has decided to leave rates on hold at 3 per cent.

Home owners would certainly welcome lower repayments but the RBA has to consider the wider implications of lowering the cash rate and today they’ve continued with the same wait-and-see strategy displayed over the past two years.

Fixed rates remain nearly a full percentage point below most variable rates. This is strong evidence that the lending markets are anticipating a rate cut. Additionally, there’s an affluence of reports that cost-of-funds pressures are easing for banks. It’s very likely we will see some strong competition in the next few months from lenders looking to offer the lowest interest rates.