July 31, 2021

RBA won’t use rates to cool housing market

Reserve Bank governor Philip Lowe has assured home buyers he is not about to jack up interest rates to cool a heated housing market.

House prices have surged 13.5 per cent in the past year, the strongest gain since 2004, which has resulted in record levels of borrowing at ultra-low interest rates.

But Dr Lowe said there was a common misconception the central bank would step in to choke off house price rises by raising interest rates.

“It would be the wrong thing to do, and I don’t think it would work,” he told economists on Thursday.

“If borrowing is unsustainable then we will be talking with APRA about prudential tools, but we are not going to use monetary policy to deal with rising housing prices.”

The RBA and the Australian Prudential Regulation Authority are carefully monitoring developments in the housing market to make sure lending standards do not deteriorate.

They have previously…

Read full article here: 7news.com.au