Is ‘ultra-cheap’ funding on its way out?
A second big four bank has gone and hiked its fixed home loan rates for owner-occupiers. ...
With the RBA expected to announce yet another hold on the official cash rate for Tuesday, experts have released their predictions on when the next move will be.
After just one rate call where experts said it could be a decade before there could be any rate movement, experts are now saying it is looking more and more likely rates could move, and that it may drop even further.
According to aggregator Finder’s RBA cash rate survey, all 28 polled panellists believe rates are to hold for February, but a change is likely around the corner.
Previously, 80 per cent of the Finder panel believe a rate rise would be next, and believed so for the last two years. This month, only 40 per cent believe in a rise.
Stephen Koukoulas, managing director of Market Economics, said a change could be happening as early as next month.
“[The RBA] will acknowledge the economy is weaker than when it last met and will signal a change in bias towards an easing.
“It may wait a month or two before acting on that bias,” Koukoulas said.
Finder insights manager Graham Cooke said this was the most dramatic shift he had seen over the last four years of running the survey.
“Economists are now swinging significantly in favour of a cut this year, but nobody can agree on exactly when this will happen,” Mr Cooke said.
However, despite the talk of cuts, Mr Cooke said right now is still a good time to be buying property, with housing affordability having a strong outlook.
“It’s true some lenders are making out-of-cycle rate hikes – we’ve seen 96 in the loans we compare on Finder so far this year – but not all banks are raising rates. In fact we’ve also seen 69 lenders cut rates,” he said.
“The bottom line is if you’re looking to buy now, it’s overwhelmingly a buyer’s market. Use your bargaining power and look for value before you buy.”
The cause of the cut belief, according to experts, was the current state of the market softening occurring across the country.
“Along with housing concerns, inflation is still sitting below two per cent, so another cut may be needed to stimulate the economy,” Mr Cooke said.
“The only issue with further cuts is that it reduces the ability of the RBA to adapt to softer economic conditions in the future.”
Following this, supported by Finder’s Economic Sentiment Tracker, was the decline in employment positivity from 56 per cent in December to 29 per cent in January.
Although unemployment is at the low figure of 5 per cent, the Finder panellists noted there is a weakening of job prospects in the future.
The overall economy, Mr Koukoulas said, is seeing its growth slow down according to GDP, and is expected to slow further over the next quarter.
“The labour market tends to lag behind the greater economy by a couple of quarters,” he said.
“This trend – combined with lower job vacancy advertising numbers – indicates a risk that employment will be weaker in the first half of this year versus previous years.”