RBA rate hikes inevitable
The CEO of Mortgage Choice has warned consumers to brace themselves for more expensive home loan rates.
John Flavell has predicted that the next move by the Reserve Bank will be upward.
“Over the last few months, we have seen significant improvements in both the domestic and global markets. Domestically, business conditions have shown signs of improvement, the unemployment rate has fallen to a low of 5.4%, and property price growth has started to stagnate across some markets in line with expectations,” Flavell said.
But Flavell forecast that, when rates do rise, they won’t move “at breakneck speeds”.
“Interestingly, our data shows the majority of Australians also believe interest rates will remain low for the foreseeable future and will only steadily increase over the next 12 months,” he said. “When asked what they thought would happen to interest rates throughout 2018, 52.5% of Australians said interest rates would rise, albeit quite slowly. Meanwhile, a further 27.8% said they expect the RBA to leave the cash rate on hold for another 12 months at least.”
But regardless of when the move comes, Flavell argued an upward move by the RBA was inevitable.
“The reality is, the cash rate will not remain at this level forever. It’s not a question of if, but when, the Board decides the time is right to lift the official cash rate from its current historically low setting.”