Symond joins Melbourne Cup rate cut chorus

by Mackenzie McCarty02 Nov 2012

Aussie Home Loans' John Symond has urged the RBA to further reduce the cash rate next Tuesday.

Following a rate cut last month to 3.25% and a cut on every Melbourne Cup day since 2006, Symond said market conditions demanded similar action from the Reserve Bank next week.

“Australia continues to be susceptible to economic shocks from overseas and small retailers and businesses are doing it tough as we head into the crucial Christmas retail season," Symond said.

“A rate drop will boost retail sales and the rest of the economy – especially employment - providing much needed confidence to consumers."

Data released by RP Data yesterday showed a sudden reverse in previous capital city dwelling value gains.

With an overall value reduction of 1% across all capital cities, even markets that were supposed to form the vanguard of a revival suffered falls, including Sydney with a -0.9% change.

RP Data research director Tim Lawless said the results highlighted how delicately balanced the housing market is ahead of the RBA decision.

“Whether the October decline is a blip on the path to a recovering market, or a sign of further weakness is yet to be seen," he said.

"Despite the cash rate being only 25 basis points higher than the emergency lows seen in 2009, we are yet to see a real improvement in consumer confidence or housing market transaction volumes.

“Until we see optimists outnumber pessimists in consumer confidence surveys, a recovery in the housing market is likely to remain precarious,” Lawless said.


  • by Peter Wood 2/11/2012 10:11:26 AM

    John is right on the money...reduce the rates... devalue the Aussie dollar and lets get some domestic growth !

  • by overthrborderbroker 2/11/2012 10:17:45 AM

    Consumer confidence is at an all time low with property values still bouncing along the bottom. Some States have incentivised buyers to construct or buy brand new homes and latest statistics are being touted as showing a recovery in the sector. The developers and vendors have simply jacked up their prices to take full advantage of the increase in grants. Just watch what will happen in a couple of years when young people who manage to squeak in to these properties at highest LVR, maximum servicing and with minimal savings (relying more on the grants than cash in bank) start the sad treadmill of divorce and separation. They will find that they own negative equity and the whole incentive programme will end up in tears as the banks foreclose and hound them personally for the shortfalls.

  • by Scott Beattie 2/11/2012 10:33:20 AM

    Didn't Aussie only pass on .18% of the .25% rate cut last month?? This 'chorus' calling for more rate cuts need to ensure that they are all singing from the same song chart!!