Bank predicts no interest rate rises until August 2015
HOMEOWNERS could be looking at another year without interest rate rises, as the home building industry gears up and historically low rates were tipped to be maintained.
After the Reserve Bank forecast a likely hold pattern on rate rises for some time to come, Westpac has predicted it could be August next year before rates rise again.
The nation's cash rate has remained unchanged at a low 2.5% since August last year, and Westpac chief economist Bill Evans believes not much has changed.
Mr Evans wrote in a monthly update to clients that homeowners and mortgage holders could expect "at least another year of steady rates".
While some economists were until recently tipping a rate rise to come before the end of the year, Mr Evans wrote he did not expect one until August next year.
"The real issue is around how long this recent shock to confidence from the May federal budget will constrain consumer confidence," he wrote.
"We expect that through the remainder of the year the consumer will begin a steady lift in confidence and activity as concerns around the budget dissipate."
The welcome news for homeowners comes as more positive signs emerge from the home building sector, after a strong March quarter for new dwelling starts.
Data from the ABS on Wednesday showed an 8.7% lift in new home building, including a 12.8% surge in detached homes - a traditional cornerstone of the home building industry.
Housing Industry Association chief economist Harley Dale said every state and territory had a lift in the figures except South Australia.
He said in a statement the annual level of new dwelling starts was now at its highest since late 2010, "with further upward momentum to come".
"At a time when the economy is generally regarded to be under-performing, new home building is achieving the opposite outcome," he said.
"The challenge is to harness this momentum and use it as the platform for enacting real housing policy reform.
"Low interest rates and some limited housing supply reforms to date won't get us to that point."
The RBA will meet to consider the cash rate again on August 5.