Some very important data was released over the last week which is particularly relevant considering the Reserve Bank is meeting on Tuesday to discuss interest rates. Financial markets are suggesting a 65 per cent chance that the cash rate will rise by 25 basis points. The RBA are likely to be taking a hard look at housing values, with the latest RP Data – Rismark Hedonic Home Value Index showing a further 1.4 per cent increase in home values over February (on top of the 2.0 percent recorded in January). At the opposing end of their thinking around whether to lift the cash rate will be the weak retail sales figures (down 1.4 per cent in February) and low rate of dwelling approvals (down 3.3 per cent in February). A lift in interest rates may dampen the property market, but will also act to further quell retail sales. A 25 basis point lift by the RBA will take the cash rate to 4.25 per cent and the average standard variable mortgage rate to about 7.15 per cent which is still 10 basis points below the decade average.
Source: RP Data 1 April 2010