Tim Lawless comments on today's RBA interest rate decision.
The decision to keep rates on hold was arguably one of the safer bets today, with the outcome widely anticipated by the market.  The performance of the housing market was likely a key topic of discussion amongst RBA board members, with the CoreLogic October results released today showing a further 0.5% rise in dwelling values across the capital cities.  Since the first rate cut this year in May, the CoreLogic hedonic index has increased by 4% across the combined capitals, with more substantial rises reported in Sydney and Melbourne.  With the cash rate on hold, mortgage rates are likely to remain at the lowest level since the mid 1960’s.  It’s becoming more broadly accepted that such low mortgage rates have contributed to a renewed strengthening in housing market conditions despite lower transactional activity and rising affordability constraints, and policy makers would be reluctant to offer more stimulus to the already hot housing market performance.