Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments
Monthly repayments could soon cost borrowers a lot more cash if Westpac’s predictions for rate rises do come to fruit...
The Reserve Bank has today released the outcome of its monthly board meeting for April.
The RBA today held the official cash rate at a record-low of 1.5 per cent.
Some of Australia’s top economists and property experts were mostly unanimous in this month’s hold, according to comparison site Finder, with 98 per cent of their panel predicting the move.
My Housing Market’s Dr Andrew Wilson said while the expectations for a cut have been gaining traction, current economic conditions indicated that the cash rate would remain as is for another month.
“[The] latest labour market data would have bolstered the RBA clear resolve to leave rates on hold at least for April given the banks’ continued reference to employment data as the key measure for rate consideration, Dr Wilson said.”
Shane Oliver at AMP said, in order for a cut, there needs to be more factors in play to indicate a weakening economy.
“The RBA probably needs to see more evidence that the slowdown seen in the second half last year is not just temporary, that consumer spending is under serious threat and that this will drive higher unemployment and lower for longer inflation,” Mr Oliver said.
“It will probably also want to see what sort of fiscal stimulus comes out of the budget and the federal election outcome. So rate cuts are probably still several months off.”
The only expert to call for a movement other than no change was Stephen Koukoulas, economist at Market Economics, who predicted that April’s decision would be to cut interest rates.
“The economy has slowed, with the per capita GDP recession in the second half of last year probably continuing into 2019,” Mr Koukoulas said.
“Inflation is low and with the household sector under pressure from falling house prices, some policy stimulus is needed.”
According to John Kolenda, managing director of Finsure and 1300HomeLoan, while he does not see any cash rate movement before June, banks could potentially lower their rates regardless of the RBA decision.
“Funding costs for banks have actually been falling and they could cut rates to offset some rises they imposed last year that were driven by rising funding costs,” Mr Kolenda said.
“Home loan customers should always be looking for the best interest rate deal and lenders are competing aggressively for your business, particularly if you have a lot of equity.
“Contact a mortgage broker to make sure you are getting the best terms possible and save money.”