made a mistake after significantly cutting the cash rate during the GFC in 2009 by raising it too quickly. A lot of the problems we have experienced in the past two and a half years were caused by the RBA
increasing the cash rate by 175 basis points to what it described as more normal levels between October, 2009, and November, 2010.”
Kolenda says consumers are ‘craving’ stability right now and argues that the RBA should play its part.
“The central bank has at least acknowledged inflation is under control and consistent with its medium-term target.”
However, he says consumers could still hope to see banks lower their mortgage rates slightly as they aggressively compete for home finance business.
“Considering the fact that they have clawed back some margin and the cost of funds is easing we could see one of the majors reducing rates to win over customers. With competition intensifying amongst lenders due to slowing demand, we could see their rates reduced slightly by five to 10 basis points over the coming months. The recent positive signs would deteriorate dramatically if the RBA steps in and increases rates again.”
“We are now just starting to see the benefit of those cuts flowing into the economy so it would be madness to see the RBA make the same mistakes again.”