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Australian cash rate on hold

Bank mortgage rates, home prices and implications for investors

Key points

- The RBA has left interest rates on hold. The arguments to cut or hike rates are evenly balanced and we can’t see an official rate hike until second half 2018. - For the RBA to hike rates just to slow the Sydney and Melbourne property markets at a time of softness elsewhere would be madness. - But various threats to the hot Sydney and Melbourne markets are growing and point to slowing price gains. - For investors: bank term deposits offer poor returns; remain wary of the $A; and shares, commercial property and infrastructure continue to offer attractive yields.

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