Heart for first time home buyers and homeowners as interest look to have peaked. Next move down?
First time home buyers and homeowners can look forward to an extended honeymoon on interest rates after recent lower petrol bowser prices drove inflation down.
Leading bank economists declared interest rates may have peaked after inflation figures showed the consumer prices fell by 0.1 per cent last quarter. This is the first time in eight years inflation fell, albeit off a relatively high level.
And even after one-off falls in the price of petrol and fruit -- particularly bananas -- were taken into account, inflation rose by just 0.5 per cent for the quarter.
Economists said the Reserve Bank should have little choice but to keep interest rates at current levels at least until the end of the year, with some tipping it may then cut rates.
"In our view, yes, interest rates have peaked because inflation has peaked," Commsec's Craig James said.
"Underlying inflation was wonderful and the Reserve Bank will be much more likely not to rush in and cut."
The National Australia Bank's Alan Oster said the surprisingly low inflation numbers suggested homeowners could sit back, relax and watch for up to a year.
"We'd never say, 'Never, ever', but homeowners can certainly breathe a sigh of relief at these figures," Mr Oster said.
ANZ's chief economist Saul Eslake said the inflation numbers were at the bottom of the Reserve Bank's safety margin before they were forced to drive up rates.
"There is no justification for a rate rise at the moment and probably not before the next election," Mr Eslake said.
"And it is more likely that the next move will be down rather than up . . . but not before November or December."
Economists had forecast that the core CPI figure would rise by 0.7 per cent and 3.1 per cent annually.
But the CPI's annual underlying rate of inflation was 2.9 per cent.
"These figures really altered the landscape surrounding interest rates and are a really encouraging sign for the RBA," TD Securities chief strategist Stephen Koukoulas said.
Prime Minister John Howard, who says he does not talk about interest rates, seized on the figures by calling an impromptu press conference to describe them as "extremely welcome inflation news".
"Clearly if you're looking at both the headline rate and the underlying rate, they have gone in the right direction for interest rates," Mr Howard said.
Enzo Raimondo of the Real Estate Institute of Victoria said the figures would make things easier for homeowners.
"Affordability is going to be impacted quite positively. It is a good result," Mr Raimondo said.
He said that unlike other states, property prices in Victoria were very stable and continued to increase marginally each quarter.
The median price of a Melbourne house was $385,000 -- cheaper than Brisbane, Perth, Sydney and Canberra.
"Melbourne real estate represents good value," Mr Raimondo said.
Source: Newscorp
Leading bank economists declared interest rates may have peaked after inflation figures showed the consumer prices fell by 0.1 per cent last quarter. This is the first time in eight years inflation fell, albeit off a relatively high level.
And even after one-off falls in the price of petrol and fruit -- particularly bananas -- were taken into account, inflation rose by just 0.5 per cent for the quarter.
Economists said the Reserve Bank should have little choice but to keep interest rates at current levels at least until the end of the year, with some tipping it may then cut rates.
"In our view, yes, interest rates have peaked because inflation has peaked," Commsec's Craig James said.
"Underlying inflation was wonderful and the Reserve Bank will be much more likely not to rush in and cut."
The National Australia Bank's Alan Oster said the surprisingly low inflation numbers suggested homeowners could sit back, relax and watch for up to a year.
"We'd never say, 'Never, ever', but homeowners can certainly breathe a sigh of relief at these figures," Mr Oster said.
ANZ's chief economist Saul Eslake said the inflation numbers were at the bottom of the Reserve Bank's safety margin before they were forced to drive up rates.
"There is no justification for a rate rise at the moment and probably not before the next election," Mr Eslake said.
"And it is more likely that the next move will be down rather than up . . . but not before November or December."
Economists had forecast that the core CPI figure would rise by 0.7 per cent and 3.1 per cent annually.
But the CPI's annual underlying rate of inflation was 2.9 per cent.
"These figures really altered the landscape surrounding interest rates and are a really encouraging sign for the RBA," TD Securities chief strategist Stephen Koukoulas said.
Prime Minister John Howard, who says he does not talk about interest rates, seized on the figures by calling an impromptu press conference to describe them as "extremely welcome inflation news".
"Clearly if you're looking at both the headline rate and the underlying rate, they have gone in the right direction for interest rates," Mr Howard said.
Enzo Raimondo of the Real Estate Institute of Victoria said the figures would make things easier for homeowners.
"Affordability is going to be impacted quite positively. It is a good result," Mr Raimondo said.
He said that unlike other states, property prices in Victoria were very stable and continued to increase marginally each quarter.
The median price of a Melbourne house was $385,000 -- cheaper than Brisbane, Perth, Sydney and Canberra.
"Melbourne real estate represents good value," Mr Raimondo said.
Source: Newscorp
posted by Rick Adlam, Mr Mortgage at
7:05 AM
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