Loan Market: RBA moved too soon

by BN06 Oct 2009

Loan Market Group has slammed the RBA for lifting interest rates today, saying it has put "a healthy housing market in jeopardy".

It noted that the RBA became the "first central bank of a major economy to raise its cash rate during the global financial crisis".
Loan Market Group COO Dean Rushton played down the impact it would have on households paying off an average home loan but said it would "hurt consumer and business confidence and possibly have an adverse impact on a national housing market which has so far weathered the global economic downturn.

"An increase of 0.25% means another $46 a month for someone repaying a $300,000 loan but it has a far more severe impact on the mentality of mortgage holders," he said.

"It will create an expectation that rates will rise again rapidly and that will have a knock on affect. It could deter people from upgrading their home, purchasing an investment property or renovating, and in the lead up to Christmas this impact could flow on to general spending."

Rushton said the economy would have been better prepared for the RBA to raise rates again in early 2010.


  • by Planettelex 7/10/2009 2:01:38 PM

    I think Brokernews was meant to say "too soon" rather than to soon(as I don''t think soon is a place in this country).

    Nevertheless, I do agree with Loan Market Group, with the FHOG decreasing, unemployment still high and the tougher lending guidelines we now are faced with, this will slow down the housing market once more.
    However the rate rise was probably inevitable with all the constant LIES in the media recently about the economy picking up, etc.
    The economy is not really turning around yet, the heamorrhaging has maybe slowed down just a little thats all.

  • by FP 7/10/2009 5:29:46 PM

    This is so hypocritical coming from Loan Market Group. In an article published back in 11 August 2009 (Mortgage Business), Loan Market Group tipped interest rates to rise in the coming months, and urged home owners to budget for up-coming rate rises. They knew back then that rate rises were likely to come to fruition because of market indicators. So I don''t understand why they should "slam" the RBA (or is this just Brokernews trying to sensationalize things). LMG even predicted that increments could be in 0.5 to 1.0 percent increases.
    I also find it hypocritical that LMG suggests that the RBA''s 0.25 increase "will create an expectation that rates will rise again rapidly", but in the same article they themselves are saying/suggesting the same thing! Go figure!