Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

Joel Robinson

First look at MAYD's North Kirra mixed-use precinct

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Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

&nbsp;

[smartcode_project_cta:default project_id=152737]

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Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

A collection of just 25 large-format apartments and penthouses overlooking Goodwin Park is entering the Coolangatta market, with <a href="https://www.apartments.com.au/new-apartments/marea-residences-coolangatta-27-27a-dixon-street-coolangatta-qld-4225">Maréa Residences</a> combining a low-density, residential-only approach with uninterrupted park and Pacific Ocean outlooks.

Located at 27 Dixon Street, Maréa comprises three and four-bedroom residences alongside a limited number of dual-level penthouses, with the project positioned between Goodwin Park and <a href="https://www.apartments.com.au/developments/coolangatta-qld-4225">Coolangatta</a>’s coastal precinct.

Construction has commenced, with completion currently estimated for late 2027. Three-bedroom residences are priced from $1.8 million.

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The project has been designed around its northern outlook across the park, with the building’s architecture, landscaping and material palette intended to establish a connection with the neighbouring green space. The residences have been configured to maximise natural light and views across Goodwin Park towards the ocean.

Inside, the material palette incorporates timber, stone and brushed brass, complemented by curved detailing and ambient lighting. Kitchens and bathrooms carry the same natural material approach, while residences also include basement parking, storage and lift access.

Maréa’s penthouses are arranged over two levels and include private pools, adding another layer to the project’s focus on larger-format apartment living. Across the development, residences are configured with three or four bedrooms rather than the broader mix of smaller apartment types commonly found in larger projects.

[smartcode_project:default project_id=150999 project_image_fid=374010]

Resident amenity is concentrated at rooftop level, where landscaped entertaining terraces and pools take advantage of elevated views across Coolangatta and the Pacific Ocean.

The project has so far been particularly well received by local owner-occupiers and downsizers, according to Urban Activation Property Sales and Marketing Director Matt George, with the residential-only format, construction quality and northern park outlook among the features resonating with purchasers.

“The uninterrupted northern aspect overlooking Goodwin Park has been a key point of difference, with buyers attracted to the sense of serenity and open space the park provides, while still enjoying easy access to the ocean and being within walking distance of the lifestyle and amenities Coolangatta has to offer,” George said.

[smartcode_project:default project_id=150999 project_image_fid=374002]

“The combination of high-quality construction, a residential-only building, park outlook and proximity to the beach has resonated strongly with the local downsizer market.”

The Dixon Street address is within walking distance of Coolangatta Beach and the broader southern Gold Coast coastline, including the surf breaks at Snapper Rocks and Kirra. Coolangatta’s cafés, restaurants and retail are nearby, while Gold Coast Airport is also within close proximity.

[smartcode_project_cta:default project_id=150999]

Maréa Residences brings parkside apartments to Coolangatta

Melbourne developer PDG has secured Victorian Government approval for its $1.5 billion Southbank development <a href="https://www.apartments.com.au/new-apartments/the-one-1-queens-bridge-street-southbank-vic-3006">The One</a>, clearing the way for the long-dormant riverfront site opposite Crown to finally be developed.

The Minister for Planning has approved the project at 1-29 Queens Bridge Street, with the Department of Transport and Planning issuing the planning permit following its assessment.

The approval will allow PDG to develop the prominent 5,059 sqm site with a major mixed-use tower comprising premium apartments, including branded residences, a luxury hotel and boutique office space.

PDG acquired the site in late 2024, with its position directly opposite Crown's main entrance and near Melbourne's Arts Precinct making it one of Southbank's most significant remaining development opportunities.

<img alt="PDG" data-entity-type="file" data-entity-uuid="3933013e-6332-4386-b9be-089df05caf17" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.22%E2%80%AFAM.png?VersionId=sITIgBqDL0N3VNSMwWEmF5UA.uvcsRyu" />

Designed by COX in collaboration with ODO and PDG, the tower's architecture draws on the movement of the Yarra River, with six vertical pleats running the height of the sculpted facade.

The project will also see the heritage-listed Queens Bridge Hotel restored and incorporated into the development&nbsp;with new hospitality and public uses, including a rooftop venue.

A significant component of The One will be its residential amenity.

More than 5,000 sqm of resident facilities will be delivered across a single level, making it one of the largest consolidated residential amenity offerings proposed in an Australian apartment development.

The planning approval also incorporates a major upgrade of Queensbridge Square, which PDG will deliver in partnership with the City of Melbourne.

<img alt="PDG" data-entity-type="file" data-entity-uuid="73167fcd-1031-4b6f-a408-a064cfe45ed1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.17%E2%80%AFAM.png?VersionId=Pf1AEWxw6SNmBqR0zQW5lyEze.MtxgFp" />

The existing square will be revitalised as a new civic and pedestrian space along the Yarra River, strengthening the connection between the project, Southbank and the riverfront.

PDG Founder and Managing Director Vince Giuliano said the approval represented a major milestone for a site which has remained largely underutilised for more than 15 years.

“This is the most significant Planning Permit approval Melbourne has seen in recent years,” Giuliano said.

“For more than 15 years, this site has remained underutilised. This approval enables us to deliver a project that will contribute meaningfully to the revitalisation of Southbank, restore and reactivate an important heritage building, and create a new civic and hospitality destination for Melbourne.”

The latest approval follows an earlier planning permit issued by the City of Melbourne covering demolition works across part of the site at 9-29 Queens Bridge Street. Those demolition and early works are already underway.

PDG has also started generating early interest in the residential component from owner-occupiers ahead of a planned public launch in early 2027.

PDG secures approval for $1.5bn Southbank apartment development, The One

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

Interest Rates

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The graphs summarise macroeconomic and financial market trends in Australia as viewed by the Reserve Bank of Australia.
The charts cover Household Saving Ratio, Private Residential Building Approvals (below), Household Finances, Household Wealth and Liabilities, Housing Prices and Housing Loan Approvals. <a href="https://www.rba.gov.au/chart-pack/household-sector" target="_blank">Click here</a> to view them all.
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Six charts that shape RBA rate thinking: November chart pack

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GUEST OBSERVER
The Reserve Bank has not materially changed economic growth forecasts but trimmed short- term inflation forecasts. 
Economic growth is seen at 2.0-3.0% in June 2016, unchanged from the previous forecast. But underlying inflation is now seen between 1.5-2.5% in June 2016, down from the earlier forecast of 2-3%. 
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What does it all mean? 
The Reserve Bank intimated on Tuesday that the economic outlook was improving while at the same time noting inflation was lower than expected. Clearly that gives the Reserve Bank scope to cut rates, if it was needed. But the Reserve Bank is not giving any indication that it intends to act on that ‘easing bias’ any time soon.
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 The Statement on Monetary largely fleshes out points noted in the monetary policy decision on Tuesday and Reserve Bank Governor’s speech on Thursday.
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 No doubt the Reserve Bank would like growth a little stronger than current levels, that way the jobless rate could come down. Still, moderate growth with low inflation and stable unemployment isn’t a bad combination either.
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 CommSec expects rates to stay low for the foreseeable future. 
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<div class="column">The RBA expects annual economic growth around 2.25% and underlying inflation around 2.00% over the next few months. </div>
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Economic outlook: “Overall, the forecasts for GDP are little changed from the August Statement. GDP growth has been revised down slightly towards the end of the forecast period to reflect updated forecasts for resource exports, which are still expected to make a substantial contribution to growth.” 
“The forecast for growth in economic activity over the next two years is not materially different from what was presented in the previous Statement. GDP growth is expected to be between 2 and 3% over the year to June 2016, rising to 23⁄4–33⁄4% over the year to June 2017, which is around its long-run average.”
“While quarterly inflation outcomes can be volatile, the broad-based nature of the weakness in the September quarter suggests that inflationary pressures are a bit more subdued than earlier anticipated. As a result, the inflation forecasts are lower in the near term. Underlying inflation is now expected to be around 2 per cent over most of next year before picking up to be around 21⁄2 per cent. Inflation expectations remain a little below average..”
“Domestic inflation pressures are likely to remain well contained and the depreciation of the exchange rate is expected to place gradual upward pressure on tradable prices.”
 What is the importance of the economic data? The Reserve Bank releases its Statement on Monetary Policy each quarter. The Statement is the Reserve Bank’s assessment of economic and financial conditions and also contains the latest inflation views. The Statement is crucial is assessing the short-term outlook for interest rates.
What are the implications for interest rates and investors?
If interest rates are going to stay low or move lower, investors need to shop around for the best returns on their investments. There are some solid dividend yields on offer such as: ANZ 6.8 per cent, NAB 6.9 per cent, Westpac 6 per cent, CBA 5.5 per cent, Telstra 5.7 per cent, BHP Billiton 7.2 per cent, Woodside Petroleum 9 per cent. In terms of the high yielding resource company dividends the question relates to the sustainability of recent dividends.
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 In terms of online savings accounts, returns of up to 3.5 per cent can be achieved for periods up to four months (cash rate 2 per cent)
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 CommSec expects no change in the cash rate over the next year. 
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<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</div>
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Reserve Bank tips moderate growth, lower inflation: Craig James

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GUEST OBSERVER
In case there was some lingering uncertainty, the Reserve Bank Governor had made it clear that if rates were to move anywhere in the next six months it would be down, not up.
The Reserve Bank Governor has gone to some length to explain the thinking about recent increases in bank home loan rates and the impact on monetary policy. And the conclusion was that the higher bank loan rates won’t have a big impact on the broader economy, and thus not requiring a response from the Reserve Bank in terms of cutting interest rates.
The speech by the Reserve Bank Governor was entitled the “Path to Prosperity”. And there were key messages. There needs to be improvements in infrastructure. And on this point the Governor said “there are some encouraging developments.” Glenn Stevens also stressed the importance of productivity enhancements: “with the terms of trade-driven improvements now behind us – and at least partly reversing – productivity is the main game.” Stevens also noted the importance of budget repair: “The need for medium-term budget repair also remains.”
Car sales continue to soar to record levels, with SUVs the major catalyst. Record vehicle sales combined with yesterday’s data showing above-average growth of retail spending, confirms the Reserve Bank upbeat view on the economy. The Reserve Bank certainly has no need to act on the easing bias by cutting interest rates.
What do the figures show?
Reserve Bank Governor Speech
Reserve Bank Governor Glenn Stevens delivered a speech “The Path to Prosperity”
On interest rates: “were a change to monetary policy to be required in the near term, it would almost certainly be an easing, not a tightening.”
On higher mortgage rates announced by banks: “my preliminary assessment is that the macroeconomic effect of these actions in themselves may not be large. It is one part of a much bigger and evolving landscape. Nonetheless, the Reserve Bank Board will keep this matter, and that broader landscape, under careful review.” 
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<div class="column">Impact of higher mortgage rates on sentiment: “Could the ‘shock’ value of the rises in mortgage rates itself lead to a significant change in that trend, gentle as it is, of improvement? While such an outcome is perhaps conceivable, given the starting point and all the above considerations, it seems to me a bit of a leap to draw that conclusion.”</div>
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Quantifying impact of bank home rate changes: “Measuring across the total loan book, the recent actions are the equivalent of roughly half of one 25 basis point monetary policy change. They take back perhaps a quarter of the extent of interest rate easing seen since the start of this year, and a smaller proportion of the total easing in lending costs seen over the past two years.”
Reserve Bank distances itself from bank rate hikes: “Let me be clear that in making these comments I am not offering an endorsement of the banks' actions. Nor should an assumption that shareholder returns must not decline as a result of the effects of supervisory measures, or any other factor, simply be accepted without question. The ‘right’ rate of return for bank shareholders is, as others have observed, an open question. It is not a constant of the universe.”
On the Federal Budget: “The need for medium-term budget repair also remains. Here also progress has been made, and the budget deficit at present still compares favourably with what we see in many other countries. But my sense is that a fair bit of the necessary national conversation about how we pay for all the things we have voted for lies ahead. This doesn't imply a need for radical immediate action, but I suspect it does mean an unusually long period of tight budget discipline on recurrent spending is likely to be required.”
New vehicle sales
According to the Federal Chamber of Automotive Industries (FCAI), Australian new motor vehicle sales totalled 94,321 in October, up 3.4% over the year. In the year to October 2015 a record 1,146,194 new vehicles were sold.
Passenger vehicles in October were down 5.3% on a year earlier with heavy commercial vehicles down by 8.3% and light commercial vehicles were down by 1.9%. Sales of sports utility vehicles (SUVs) were up by 20.5% (small SUVs up 37%).
In the year to October, SUVs represented 43.5% of combined passenger car and SUV sales. SUVs accounted for a record 34.8% of all vehicle sales in the year to October.
What is the importance of the economic data?
The Federal Chamber of Automotive Industries releases estimates of car sales on the third business day of the month. The figures highlight the strength of consumer spending as well as conditions facing auto &amp; components companies. 
What are the implications for interest rates and investors?
The Reserve Bank has made it clear that monetary policy has an “easing bias” meaning that if rates were to change, it would be down. But with the Reserve Bank seemingly more positive on economic prospects, there are no signs that the Reserve Bank will draw on the insurance policy to actually lower rates. 
CommSec expects the Reserve Bank to remain on the interest rate sidelines over the coming year.
The continued strength of new car sales highlights the underlying strength of consumer spending. It is not out of the question that more SUVs will be sold in coming years than passenger cars.
 
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<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</div>
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Reserve Bank gives view on rates: Craig James

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Fifteen lenders have announced rate increases to owner-occupied variable home loans according to comparison website finder.com.au, with the biggest increase being 0.20% by Westpac, Macquarie Bank, Citibank and ME Bank.
The Bank of Queensland and CUA are the latest to announce home loan increases, according to finder.com.au consumer advocate Bessie Hassan.
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She said 15 lenders monitored by finder.com.au have so far announced variable rate owner-occupier home loan increases of up to 0.20 percentage points, with one lender’s move already reportedly effective (Citibank).
“So far, the biggest increase was 0.20 percentage points by four lenders: Westpac, Macquarie Bank, Citibank and ME Bank, while the average rise was 0.17 percentage points. This will add an extra $33 per month to a $300,000 mortgage, as well as putting more pressure on many households who are preparing for the most expensive time of year at Christmas.," she said.
“Bank of Queensland and CUA were the latest lenders to announce variable rate increases to its owner-occupied home loans yesterday (November 4, 2015), with their standard variable home loan rates set to rise by 0.18 and 0.13 percentage points respectively. CUA also announced a 0.14 percentage point drop to one of its home loan products while raising eight others.
“It’s clear that the Reserve Bank is having less of an impact on interest rate movements so there’s no point for borrowers to wait for a cash rate cut and expect lenders to follow. However, the silver lining is that there are hundreds of home loans out there and many smaller lenders are offering very competitive deals. For instance, the cheapest variable rate home loan is 3.79% by Mortgage House (12-month discounted rate). Now is the time to compare home loans, ask your lender for a discount or switch to a better deal before the rate hikes take effect.”
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Fifteen lenders announce owner-occupied variable rate increases

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Heritage Bank has today cut its discount variable home loan rate to 3.98%.
The special discount variable rate is available for owner-occupier loans of more than $150,000, with a maximum LVR of 90%.
Heritage has also cut the rates on its Home Advantage Variable package product, which bundles together a home loan, credit card and transaction account.
The Home Advantage Variable rate for a loan of $700,000 or more is 3.98%; for a loan from $250,000 to $700,000 it is 4.03% and for a loan of $150,000 to $250,000 it is 4.13%.
The new rates are effective from Thursday, 5 November.  
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Heritage Bank cuts discount variable home loan rate to 3.98%

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GUEST OBSERVER
The Reserve Bank of Australia has decided to leave the official cash rate unchanged at a record low of 2%, but said there was scope for a rate cut down the line.
In a statement on the RBA website, governor Glenn Stevens said:
"At today’s meeting the Board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting. Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand."
The US Federal Reserve is expected to start increasing its policy rate in the period ahead, the statement said.
Recent attention has focused on the widening gap between the official cash rate and the mortgage rates set by the major lenders.
All of the big four banks have raised their variable home loan rates, after the introduction of tougher new capital requirements designed to act as a buffer in case of financial crisis. The new prudential regulations followed the Murray report into the financial system.
Australia’s estimated seasonally adjusted unemployment rate for September 2015 sits at 6.2%. The RBA said today that there had been “stronger growth in employment and a steady rate of unemployment.”
The RBA said inflation is low and should remain so, forecasting it to be “consistent with the target over the next one to two years, but a little lower than earlier expected.”
We asked experts to respond to the RBA decision.
Timo Henckel, Research Associate, Centre for Applied Macroeconomic Analysis, Australian National University:
This is the right decision. There are signs of weakness in the economy and financial conditions have changed, with the four big banks raising their home loan rates and global financial markets remaining nervous, but there’s not enough there to lower rates further. They are already very low by historical standards.
Inflation is low, that’s true – but a number of the CAMA Shadow Board members are still concerned about easy money and the danger of fuelling asset prices bubbles. I think several Shadow board members would not be unhappy about the banks recently increasing the mortgage rate.
Moreover, this year has witnessed a dramatic fall in energy prices, which would have exerted downward pressure on prices, albeit only temporarily. At this stage it is not clear to what extent lower inflation is supply-side or demand-side driven.
Monetary policy has been expansionary for a long time and this is helping to rebalance the Australian economy, away from the resource sector to manufacturing and the service sector. Whatever slack is left in the system is probably best left to other policy measures, like fiscal and micro-economic policy.
Today’s decision will probably not affect the gap between the official cash rate and the big four rates. When the banks lifted their mortgage rates, they presumably did not do this in anticipation of the RBA changing policy. It would have been interesting had the RBA dropped rates – would the banks have reversed their recent rate increase? Probably not. I cannot judge whether the additional regulatory measures imposed on the banks exactly justify the increase in their home loan rates. No doubt these measures were also a welcome excuse for the banks to squeeze a little but of extra profit margin for their shareholders.
Recent events have confirmed that the RBA is not the only institution assigned with macroprudential objectives. There’s been a vigorous debate, both in policy and academic circles, about whether central banks should be concerned with asset price inflation and excessive credit growth and whether they should use interest rates to prevent asset price price bubbles from becoming too large. It is reassuring to see the Australian Prudential Regulation Authority taking its role seriously and assuming responsibility.
Guay Lim, Professorial Fellow, University of Melbourne
I support and agree with the no-change, wait-and-see decision. I have concerns that further cuts will fuel asset prices with little effect on real spending.
In coming weeks, we will probably better understand what’s happening with fiscal policy and what’s happening with the US rate.
Richard Holden, Professor of Economics, UNSW Australia
The RBA’s announcement following their decision to keep the cash rate on hold at 2% had a fair bit of hedging language including:
"Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand."
So, basically, the RBA will cut rates down the track if it decides to cut rates down the track. Got it!
The big four banks are unlikely to further change mortgage rates in response, having already hiked recently in response to heightened capital requirements, but a cut in the months ahead by the RBA still looks like a definite possibility.
 
Timo Henckel is research associate, Centre for Applied Macroeconomic Analysis, Australian National University and can be contacted <a href="https://theconversation.com/profiles/timo-henckel-990" target="_blank">here</a>.
Guay Lim is professorial fellow, University of Melbourne and can be contacted <a href="https://theconversation.com/profiles/guay-lim-103128" target="_blank">here</a>.
Richard Holden is professor of economics, UNSW Australia and can be contacted <a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">here</a>. All are authors for The Conversation.
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RBA leaves cash rate unchanged at record low 2%

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Despite some growing conjecture around an imminent rate cut, the board of the Reserve Bank of Australia today decided to keep the official cash rate at 2.00%.
There was some risk that the RBA cut the cash rate today, but financial institutions may then have failed to pass the full cut on to mortgage and business borrowers. 
That would have been perceived as a double hit by mortgage holders who have just experienced a hike in their discounted variable mortgage rate.
It is dangerous timing for the economy to be undergoing a wide-sweeping rationing of credit to investors followed up by an increase in variable mortgage rates. This combined action hits the housing market more heavily than any other industry, yet new home construction has been the key direct and indirect driver of domestic economic activity in recent years. 
Any further interest rate reduction by the RBA – which seems less likely post their November decision – would need to be timed and communicated to ensure it mitigated rather than exacerbated the adverse impact of a tighter financing environment. 
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Harley Dale is chief economist, HIA and can be contacted <a href="https://hia.com.au/en/BusinessInfo/economicInfo/EcoGroup.aspx" target="_blank">here</a>.
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RBA treads most likely path in November: HIA's Harley Dale

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GUEST OBSERVER
The Reserve Bank Board decided to leave the cash rate unchanged at 2%.
Following the print of the September quarter Consumer Price Index markets priced a probability of a rate cut at around 70%. With the clearer guidance from the US Federal Reserve that a Fed rate hike in December was a realistic prospect markets revised down that probability to around 50%.
In the last 24 hours that market probability drifted a little further down to around 40%.
It has always been our view that policy would be unchanged at this meeting. That was because the low inflation print allowed the Bank scope to cut if it so desired but that decision would be predicated on a substantial downward revision in the outlook for economic growth.
We could not see how that downward revision could be justified and therefore were prepared to look through the low CPI. In the event the Bank confirmed its somewhat more confident view around the growth outlook citing “business surveys suggest a gradual improvement in conditions over the past year” and “somewhat stronger growth in employment”; “prospects for an improvement in economic conditions had firmed a little over recent months”.
There was some risk that the very low (0.3%) quarterly print for the CPI in the December quarter may have led the Bank to question the prospect that inflation would remain within the target band of 2-3%. However in the Governor’s statement he confirms his view that inflation will remain within the target over the next one to two years, albeit a little lower than earlier expected.
This theme around inflation is confirmed in the all-important final paragraph where the Bank adopts an explicit, although moderate, easing bias. This bias is expressed with the words “the inflation outlook MAY afford scope for further easing of policy, should that be appropriate to lend support to demand”. This is a weaker easing bias than the terms that had been used around inflation in the past, e.g. “were demand conditions to weaken materially the inflation outlook WOULD provide scope for easier monetary policy” (April 2012). Further evidence that this is a softer bias comes with the first sentence in the closing paragraph where the Governor assesses that “prospects for an improvement in economic conditions had firmed a little over recent months”.
Commentary around housing and credit was also consistent with the “unchanged” decision. Overall conditions in the housing market are still described as “accommodative” and credit growth has increased a little in recent months. Dwelling prices in Melbourne and Sydney and reported to be continuing to rise albeit at a more moderate pace.
There is no change in the assessment of the prospects that the Fed will start increasing its policy rate – just being described as “in the period ahead” and global financial conditions continue to be “very accommodative”.
In previous statements the Governor has singled out weakening prospects in China but China does not rate a mention in this statement although recent falls in our terms of trade are noted.
There is no change in the commentary around the Australian dollar: “the Australian dollar is adjusting to significant declines in key commodity prices”.
Outlook
Over the last week or so market pricing for a full 25bp reduction in the cash rate by December reached almost 100%. Despite the Bank adopting an easing bias we do not consider it likely that the cash rate will be reduced at the December Board meeting. The data flow over the next few weeks will be concentrated on economic activity rather than any further news on inflation. It seems unlikely that, given the Bank’s somewhat more constructive view on the growth outlook such data would trigger a rate cut by December. Of most interest will be the impact on confidence from the increase in mortgage rates by the banks and that will be known with the release of the Westpac Consumer Sentiment survey on November 11.
Other important data events will be the employment report; the quarterly wage price index; housing-related activity and prices; and the capital expenditure survey. The all-important GDP report for the September quarter will not be available until after the December meeting. Furthermore, the December Board meeting will be held only two weeks before the next meeting of the Federal Reserve where a Fed rate hike can be realistically expected.
Markets continue to price 100% probability of a rate cut by February. That is a much more realistic assessment given more time will be available to assess growth momentum and most importantly the December quarter inflation report. It is our view and, apparently, the view of the RBA that the next report will see core inflation move back to the normal “trend” number of around 0.6%. In that event our assessment of the likely growth momentum in the economy will point to rates remaining on hold in February and thereafter.
Any change in that view will be largely driven by an assessment that growth prospects in the economy are likely to lose significant momentum through 2016. 
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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December RBA rate cut seems unlikely: Westpac's Bill Evans

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GUEST OBSERVER
After one of the most anticipated Board meetings for months, the RBA today left rates unchanged, but changed their forward guidance to open up the possibility of a near-term rate cut.
Specifically, the Bank included the comment “members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand”. The fact that the Bank included this statement despite noting that “prospects for an improvement in economic conditions had firmed a little over recent months” highlights to us the importance of the 2-3% target band for inflation for the Bank.
Overall there were quite a few changes in the statement compared with the October one:
Concerns over financial market volatility have eased with the comment that “volatility in financial markets has abated somewhat”, although the Bank noted that “credit costs for some emerging market countries remain higher than a year ago”.
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 The statement acknowledged the recent low inflation print, but repeated that “inflation is forecast to be consistent with the target over the next one to two years”. The recent out of cycle mortgage rate increases were alluded to, but the RBA noted that “overall [lending] conditions are still quite accommodative”. Importantly, the Bank seems more comfortable with Sydney and Melbourne house price developments, noting the recent moderation in growth.
Overall, today’s statement highlights the importance of inflation to the Bank. That is, despite the prospect of some improvement in activity the Bank seems prepared to ease monetary policy on the back of a lower inflation outlook. This then suggests that a move in December is unlikely. The RBA seems more likely to wait until February when it will have another inflation number which will likely confirm the lower than previously anticipated inflation trajectory. Then the Bank is likely to deliver the first of at least two cuts next year in our view.
While today’s statement suggested a better outlook for activity, we are not so sure. Our own view is that next year growth is likely to remain challenged as the boost from housing starts to fade, and the support to trade from the lower AUD lessens. While the upward trend in consumer confidence coming on the back of Malcolm Turnbull’s appointment as Prime Minister is encouraging, it’s difficult to see that it will be translated into sustained strength in spending in the medium-term given the prospect of ongoing soft wages growth amid high levels of household debt. 
And any rise in the unemployment rate from its current elevated rate would be unpalatable for the RBA. So some further stimulus will be necessary, even if the impact is primary felt via a lower currency.
The easing in housing market activity in Sydney and Melbourne is also an important prerequisite for rate cuts. And today’s comments on housing suggests this key hurdle for further rate cuts is likely to be removed by early next year.
From here on it seems that a rate cut in February is most likely, and the data (both activity and inflation) will have to be sufficiently stronger to persuade the Bank otherwise. 
Felicity Emmett co-head of Australian economics, ANZ Research and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/felicity-emmett/5a/3ba/256" target="_blank">here</a>.
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Not today, but February for RBA rate cut: ANZ's Felicity Emmett

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The cash rate has been left at a record low of 2.00% for a sixth month (seven months of rates at 2%).
The Reserve Bank Board has re-instituted the easing bias – meaning that if rates are going to change, it is more likely to be a rate cut.
What does it all mean?
When appearing before the House of Representatives Economics Committee on September 18, the Reserve Bank Governor made the following remarks on official interest rates: "I think we are pretty content where we are right now.” The Governor did note however: “But the question has more been, for us: do we hold or should we go down a little bit more?” Well, the Reserve Bank Board has had another long, hard look at monetary settings and concluded that current rate settings still remain appropriate. But the easing bias is back. Just as the Governor said in September, the question is whether rates need to fall further.
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 It is important to stress that the ‘easing bias’ is more of an insurance policy rather a definite indication that rates are going to fall in future. The Reserve Bank has actually upgraded its view on the economic outlook: “the Board judged that the prospects for an improvement in economic conditions had firmed a little over recent months”.
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 The ‘easing bias’ is driven more by the fact that inflation is well contained: “the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand”. In short, it is a very smart decision.
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 Over the last month the main developments were the decisions by major banks to lift mortgage rates to cover the cost of higher capital requirements. Most of these increases will be effective later in November. In terms of economic data, inflation printed at the low end of market expectations. But there is still the prospect of retailers passing through to consumers the higher cost of imported goods.
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 Overseas, the US Federal Reserve left interest rates unchanged but hinted at a rate hike in September. But China cut interest rates and the European Central Bank confirmed that it would do all that it required to lift economic growth in the region and eliminate deflationary risks. In Australia, economic data has been generally positive – as highlighted in the Reserve Bank’s upgrade to the economic outlook. Consumer and business confidence levels have lifted; building approvals and car sales both lifted to record highs on an annual basis; consumer spending and job ads both rose in the latest month.
Perspectives on interest rates
The previous rate cut was in May 2015 (25 basis points), taking the cash rate to a record low of 2.00%. There have been 10 rate cuts since November 2011.
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The Reserve Bank had previously lifted rates seven times from October 2009 to November 2010 – a total of 1.75 percentage points, from 3.00% to 4.75%. 
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What are the implications of today’s decision? 
CommSec doesn’t expect any change in the cash rate for the foreseeable future. Inflation is under control but we believe it has more potential to rise rather than fall with the lower exchange rate pushing up prices of imported goods. The economy is well supported by record building approvals which are serving to lift many boats across the country.
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 Investors will need to continue researching the best returns on their investments with both interest rates and inflation remaining at historically low levels. In terms of ‘safe-haven’ cash-based investments, online bank accounts may offer better value than term deposits. Certainly blue-chip Australian companies offer attractive fully- franked dividends, especially for investors with longer-term time horizons. 
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<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</div>
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