RBA upgrades economic forecast in May meeting
![The Reserve Bank of Australia.](https://cdn.mozo.com.au/images/atwood/12230/rba-may.jpg)
The Reserve Bank of Australia kept official interest rates on hold at its monthly board meeting this afternoon. The cash rate currently sits at 0.1%, where it has remained since November 2020.
In his post meeting statement, RBA governor Philip Lowe outlined the Bank’s revised set of economic forecasts. It now expects GDP to grow by 4¾% over 2021 and 3½% over 2022.
“A pick-up in business investment is expected and household spending will be supported by the strengthening in balance sheets over the past year,” Lowe said.
“This recovery is especially evident in the strong growth in employment, with the unemployment rate falling further to 5.6 per cent in March and the number of people with a job now exceeding the pre-pandemic level.”
Lowe once again ruled out a tightening of monetary policy until the labour market recovers and inflation is sustainably within the 2 to 3% target band.
Any pressure to change course was eased last week, after consumer price index data for the March quarter saw headline inflation rise by just 0.6%. The annual rate of inflation also undershot expectations, increasing just 1.1%.
Underlying inflation has not been within the RBA’s target band since late 2015. Today, Lowe said he expects it to remain below the 2% mark until mid 2023.
Deputy RBA governor Guy Debelle will provide more insight into the Bank’s thinking on Thursday, ahead of the release of the RBA’s quarterly statement on monetary policy later in the week.
RELATED: May home loan snapshot: Longer term fixed rates are rising
Property values continue to climb, but the pace of growth has eased as of late. According to CoreLogic’s national home value index, prices rose by 1.8% in April, down from the 32-year high of 2.8% that was recorded in March.
While the lift in property values is welcome news for the RBA, CoreLogic research director Tim Lawless points out that younger Australians face mounting difficulties when saving to buy a home.
“With housing prices rising faster than incomes, it’s likely price sensitive sectors of the market, such as first home buyers and lower income households are finding it harder to save for a deposit and transactional costs,” he said.
Those hoping to secure a low rate on longer terms will also have to contend with rising fixed rates.
Following a trend we first observed in March, 15 lenders in the Mozo database increased rates for 4- or 5-year terms throughout April. The average 4-year fixed rate now sits at 2.46% p.a. (up 0.9% over the month).
Short-term fixed rates continue to move in the opposite direction. Notably, bcu reduced its 1-year fixed rates by 0.31%, bringing its owner occupier offering to 1.67% p.a. (3.85% p.a. comparison rate*).
For more information about mortgage and lending trends, head over to our home loan statistics page. And for an idea of where interest rates currently sit, visit our home loan comparison page.
Home loan comparisons on Mozo
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Discount Great Rate Home Loan
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An easy to use Home Loan with no establishment fee and no monthly or annual fees. Minimum deposit of 20% is required. Mozo Experts Choice Awards - Investor Home Loan Award 2024^.
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Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
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Initial monthly repayment6.25% p.a.
fixed 3 years6.20% p.a.No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.
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Discounted Home Value Loan
Owner Occupier, Principal & Interest, LVR 70-80%
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Featured Product
Mozo experts choice awards won:
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Unloan Variable
Investment, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.29% p.a. variable6.20% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- interest rate
- 6.29% p.a. variable
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- 6.20% p.a.
- Upfront fees
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