RBA puts interest rate on hold over Christmas

The cash rate will remain at 4.75 per cent over December.

The Reserve Bank of Australia (RBA) has handed a welcome boost to mortgage holders in Australia by announcing it will not be putting the interest rate up this month.

This could be a great relief to consumers before they embark on a few weeks of Christmas shopping as the run up to the festive season begins to gather pace.

It comes after the RBA moved to increase the official cash level by 0.25 per cent last month taking it up to 4.75 per cent, much to the disappointment of mortgage holders.

What's more, the Commonwealth Bank (CBA) went one further by increasing the level of its variable home loan accounts by 0.45 per cent.

In this month's announcement, RBA governor Glenn Stevens stated the overall Aussie credit growth remains subdued in the country, which echoes what he said about the situation last month.

This comes after a CBA Business Sales Indicator, which tracks the level of debit and credit card spend at its point-of-sale terminals, pointed out spending was slow over the month of October, but this could pick up in December as Christmas approaches.

In addition, Mr Stevens stated the terms of trade are at their strongest since the 1950s, adding "national income is growing strongly as a result.

"Recent information indicates that, as had been expected, private investment is beginning to pick up in response to high levels of commodity prices."

But Mr Stevens did note there has been some "caution" in the housing sector in terms of borrowing and spending, leading to a rise in the saving rate.

Summing up 2010, he noted employment growth has been "very strong" and there has been an increase in growth in wages, but that was to be expected.

Overall, Mr Stevens said the lending rates in the economy are "now a little above average".