The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
The ongoing trevails of Europe were noted in the announcement as was “Offsetting these negative influences, housing market activity continues to increase, supported by recent reductions in mortgage interest rates. In addition, repairs and reconstruction in Canterbury are expected to substantially boost construction sector activity in coming quarters. Aggregate GDP growth is projected to pick up slightly to just over 3 percent next year. Given this economic outlook, inflation is expected to settle near the mid-point of the target range.”
The Auckland housing market continues to travel along with what appeared to be a reasonably standard 3 bedroom bungalow @ 55 Paice Ave in Sandringham selling under the auction hammer @ $1,090,000 yesterday.
Barfoots Residential Sales from the past 12 months to May 2012 totalled 10,090 properties with a total value of $5.5 Billion. This is well up on the to May 2011 figures of 8,252 properties @ $4.4 Billion.
Home loan fixed interest rates continued to fall throughout May. 2 year fixed interest rates now sit around the 5.50% mark and 3 years fixed, around 5.75%.
However with a bit of negotiation customers who meet the Banks preferences are still able to get substantial discounts off those rates. It is not uncommon to see 2 years fixed at 5.10% and 3 years fixed at 5.35% as the major banks are still prepared to heavily discount in order to get new business on board and some hefty fixed interest rate penalty break fees are being paid to help get a new customer across.
A fair chunk of mortgage applications over the past 6 months have been First Home buyers, although many have been missing out at Auctions as prices are firmer than their expectations, but we hear now of a refinancing element that is more active in the finance market. These are those who are willing, and able, to move their business to a new bank in the chase for a better interest rate.
The Official Cash Rate gets reviewed on Thursday this week, the market had been pricing in a cut but Barfoots, the largest Real Estate Agency in Auckland, trumpeted a 31% increase in house sales in May and Spain has trumpeted a bank bailout of sorts over the weekend so i suspect another hold at the 2.50% level is on the cards.