Brokers prepare for record-breaking cash rate cut

by Mackenzie McCarty06 Aug 2013

The probability of a rate cut this afternoon appears all but certain, with 26 out of 27 economists surveyed by Bloomberg expecting an RBA cash rate reduction – and brokers are bracing their businesses for a whirlwind of activity following the likely announcement.

Should the RBA decide to lower the rate by the predicted 25 basis points, it would bring the cash rate to a record low 2.5%.

As reported by Australian Broker, a speech made by RBA governor, Glenn Stevens, last week indicated the bank was becoming increasingly concerned about major areas of the Australian economy, particularly the passing of  mining and credit growth ‘booms’.

Founding director of 1st Street Home Loans, Jeremy Fisher, tells Australian Broker he, like many in the industry, expects a rate cut and is planning his business strategy accordingly.

“First and foremost, we’ll get in touch with any clients that are due to settle and looking at making any necessary changes to their loans. And then we’ll go back and review any clients that are, I guess, a ‘watchlist’. So it’s pretty much just keeping our clients informed of the change.”

Fisher says 1st Street sends out a bulletin to all their clients immediately following RBA cash rate announcements in order to keep them updated.

“Then we just go back to our watchlist and touch base with everyone that’s kind of doing things as we speak – because that may or may not influence what they’re doing.”

“I think everyone’s kind of predicting [a rate cut], but we’ll soon see. It’s getting pretty low!”