Motgage Repayments Remain Unchanged
After a period of leaving rates on hold and hinting of rate rises, the RBA has lowered rates twice in late 2011 to the relief of cash strapped and heavily indebted consumers in Australia. The decision was not a surprise to many analysts although some were not expecting 2 rate cuts this year in quick succession.
While there is inflation in some services such as rental housing and electricity, it is clear that some sectors of the economy are struggling and some economic indicators are indicating a slowing of the economy. Continued turmoil in Europe is causing a high level of economic uncertainty which is being reflected in the behavior of consumers. Depending on how the situation plays out in the global economy, we may see further rate rises in 2012, particularly if the Asian economies are severely affected by the situation in Europe. It will be interesting to see how the rate cuts affect activity in the housing market in the months to come.