Predictions for today’s cash rate decision are once again leaning towards a hold at 1.5%.
The Reserve Bank of Australia (RBA) will meet today to discuss whether to raise, cut or hold the rate, which has now remained steady for the past 23 months.
In its monthly RBA survey, 100% of finder.com.au’s panel of 31 economists and experts believe it will remain the same.
When asked what the next movement may be, regardless of when it happens, 84% of the panel said they believe the next move will be an increase.
Graham Cooke, insights manager at finder.com.au, said while the rise is not expected to happen just yet, homeowners can start preparing for the future hike.
He said, “This month’s survey shows little change from the previous six, no change coming now and none on the horizon in 2018. Economists’ predictions of when a rise will happen have now been almost fully pushed into 2019.
“However, no movement doesn’t mean homeowners can rest easy until 2019. In recent weeks we have seen some smaller lenders increase rates out of cycle, and this is a pattern that could spread across the market.
“As lenders are not provided with a reason to increase rates by the RBA, the cost of international lending and interest rate increases in the US have pressured some banks to look at increasing rates anyway.”
AMP Capital’s chief economist Dr Shane Oliver is one of the experts on Finder’s panel. He said there was “no strong case to move either way”.
In his forecast, he said, “Signs that mining investment may [be] bottoming, strengthening non-mining investment, surging infrastructure spending and rising export volumes all argue against a rate cut but peaking housing investment, uncertainty around consumer spending, continuing weak wages growth and inflation, falling Sydney and Melbourne property prices, tightening bank lending standards and global uncertainty around trade all argue against a hike.”
According to a survey of brokers at mortgage marketplace HashChing, more than 95% of respondents also believe the rate will remain the same. Although this is down from 98% ahead of last month’s decision.
Siobhan Hayden, COO of HashChing, said despite confidence in the rate remaining the same, it “hasn’t prevented lenders raising their mortgage interest rates”.
She added, “What we’ve seen since last month is that smaller banks and lending institutions are raising rates in response to higher funding costs.
“This means it’s more important than ever for borrowers with a variable home loan to keep an eagle eye on their interest rates. If they receive a notice from their bank that their rates are going up, they should contact a mortgage broker right away to get help with assessing their options.
“Even a half-percent increase can result in an extra hundred or so dollars a month in mortgage repayments.”
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