{"id":188610,"date":"2025-04-01T16:30:01","date_gmt":"2025-04-01T05:30:01","guid":{"rendered":"https:\/\/propertyupdate.com.au\/?p=188610"},"modified":"2025-04-04T00:14:37","modified_gmt":"2025-04-03T13:14:37","slug":"cash-rate-on-hold-but-housing-markets-still-feeling-the-joy-from-the-february-rate-cut","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/cash-rate-on-hold-but-housing-markets-still-feeling-the-joy-from-the-february-rate-cut\/","title":{"rendered":"Cash rate on hold but housing markets still feeling the joy from the February rate cut"},"content":{"rendered":"

As expected, the RBA is taking a cautious approach, holding the cash rate firm at 4.1% in April, despite inflationary pressures easing into the target range and labour markets showing a softer outcome in February.<\/p>\n

The monthly CPI update for February shows core inflation has been tracking inside the RBA\u2019s 2-3% target since December.<\/p>\n

At the same time, jobs growth suffered the largest month-on-month fall since December 2023, taking the annual jobs growth back to 1.9% - the lowest annual change since October 2021.<\/p>\n

With inflation looking like it has been tamed and some early signs of a loosening in\u00a0labour force indicators, two of the RBA\u2019s pain points have seen some relief.<\/p>\n

However, the RBA is still wary about low productivity domestically as well as the uncertain outlook amid global trade and geopolitical tensions.<\/p>\n

Although rates were kept on hold today, as most expected, the February rate cut has already influenced housing markets, sending home values 0.3% higher in February before rising 0.4% in March.<\/p>\n

Boost to consumer sentiment<\/span><\/h2>\n

In financial terms, the 25-basis point cut in February was relatively mild: mortgage repayments on a $500k variable rate loan reduced by around $81\/month.<\/p>\n

The bigger influence can be seen in consumer sentiment, which bounced to a three-year high in March, according to the Westpac\/Melbourne Institute index.<\/p>\n

When consumers feel more confident about the domestic economy and their household finances, they are more prepared to make high-commitment decisions such as buying or selling a home.<\/p>\n

The correlation between sentiment and home sales is clear from the graph below; the flow-on effect from the uptick in sentiment should translate into increased selling activity.<\/p>\n

\"Consumer<\/p>\n

The outlook<\/span><\/h2>\n

The outlook for interest rates remains positive, with the cash rate likely to reduce further in 2025, but only gradually.<\/p>\n

The quarterly inflation outcome, which will be released on April 30th ahead of the RBA\u2019s next board meeting, will be a key factor influencing the RBA\u2019s decision in May.<\/p>\n

If core inflation holds below the 3% mark, which seems highly probable, it is looking more likely that we will see a second cut to the cash rate.<\/p>\n

Financial markets have two more rate cuts priced in this year and economists from the Big 4 banks are forecasting between one and three more cuts this calendar year.<\/p>\n

Factoring in a reasonably bullish 75 basis point cut to the cash rate for the remainder of the year (3.35% by year\u2019s end) implies that monetary policy settings will remain above the RBA\u2019s estimate of the neutral cash rate (of around 2.9%) throughout 2025.<\/p>\n

Until home loan serviceability improves more substantially, it\u2019s hard to see housing markets moving into a more material growth trend with other downside factors, including stretched affordability, reduced population growth and the current risk-averse lending environment, likely to limit the potential for a material lift in home values.<\/p>\n\r\n

<\/div>\r\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

As expected, the RBA is taking a cautious approach, holding the cash rate firm at 4.1% in April, despite inflationary pressures easing into the target range and labour markets showing a softer outcome in February. The monthly CPI update for February shows core inflation has been tracking inside the RBA\u2019s 2-3% target since December. At…<\/p>\n","protected":false},"author":32,"featured_media":167592,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,1118],"tags":[],"class_list":["post-188610","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-property-updates","category-news-and-features"],"acf":[],"yoast_head":"\nCash rate on hold but housing markets still feeling the joy from the February rate cut<\/title>\n<meta name=\"description\" content=\"As expected, the RBA is taking a cautious approach, holding the cash rate firm at 4.1% in April, despite inflationary pressures easing into the target...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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