Low interest rates: a year and counting

 It has now been a year since the Reserve Bank cut INTEREST RATES with Australia enjoying one of the longest periods of interest rate stability on record.

The decision to leave the cash rate ON HOLD at 2.5 per cent on Tuesday came as no surprise to the 20 experts SURVEYED by mortgage comparison website finder.com.au.

According to figures from the Domain Group, Australian house prices have increased by 10.9 per cent in the past 12 months, with economists noting the direct impact of record LOW INTEREST RATES.

“It now looks likely interest rates will remain on hold for the rest of the year, barring any unforeseen events and it should boost consumer confidence as we approach spring," said the chief executive of LJ Hooker, Grant Harrod.

Mr Harrod also suggested that recent price growth would draw more sellers into the market in the second half of 2014.

Those worried about a sudden hike in interest rates next year will welcome the prediction from the head of treasury at ING Direct, Michael Witts, who anticipates that when rates do increase "it will be a gradual process with several small adjustments over an extended period”.

But for now, the Reserve Bank has reiterated that "the most prudent course is likely to be a period of stability in interest rates".

The above is an extract from the article at : http://news.domain.com.au/domain/real-estate-news/low-interest-rates-a-year-and-counting-20140805-100j8j.html

Caroline He

4C Realty