The idea that we’re living in an interest rate environment on par with 2009 is inaccurate, according to 1300HomeLoan managing director, John Kolenda, due to banks ‘clawing back’ approximately 50 basis points over the last year and a half.
“They have since then had to reduce the cash rate by the same amount in response to a soft economy and subdued consumer sentiment.”
Kolenda’s comments come in a response to wide-spread speculation that the RBA may move upwards with its next interest rate decision. He says an improving domestic economy shouldn’t be a trigger for the RBA to consider lifting its official cash rate.
“While there are some positive signs in the market, there are equally as many concerns about the overall economy,” he says. “It’s premature to be talking up rates as this does not instil consumer confidence over the short-to-medium term.”
The RBA maintained its official rate at 3% at last week’s meeting, but Kolenda says he’s concerned by calls from some economic commentators for the RBA to lift rates again before the end of the year if there’s an upturn in the domestic economy.