A maximum of two more rate cuts to come say uncertain Property Observer readers

Nearly two-thirds of property investors and buyers expect the cash rate to fall over the next six months, according to a survey of more than 800 Property Observer readers.

More than a third (35%) of those surveyed expect one more rate cut over the next six months – the most popular choice among readers of the website with just over a quarter (28%) expecting two rate cuts (50 basis points)  between now and March next year.

However, a significant proportion – roughly in one five – expect no more rate cuts over this period while more than one in ten readers (12%) expect the cash rate to rise by either 25 basis points or 50 basis points in the short term.

The results of the survey suggest there is fair amount of uncertainty among investors and borrowers about the direction of interest rates.

This is also borne out by the response to a refinancing question in the survey with just a quarter of borrowers saying they would consider refinancing over the next year - a lower mortgage rate is a reason why many borrowers would refinance.

The results of the survey come less than a week until the Melbourne Cup Day November RBA cash rate decision, where sentiment has swung from a sure-bet of a rate cut to it now being a close call following a speech by RBA deputy governor Philip Lowe, who said “very low interest rates in many other economies should not be seen as a good thing or something to aspire to”.

Commonwealth Bank chief economist Michael Blythe interpreted the speech to mean that it was now only a “50-50 call” as to whether the RBA would cut rates.

Similarly, in a recent column for the Australian Financial Review, economist Christopher Joye said November rate cut hopes were dimming despite 21 out 28 economists polled by Bloomberg still expecting the RBA to trim further.

Joye highlighted that bank interest rates rather than the target cash rate set by the RBA were having more of an impact on stimulating demand.

“The RBA is belatedly starting to acknowledge that interest rates, as opposed to its target cash rate, are getting quite stimulatory for rate-sensitive sectors,” said Joye.

"Two major banks have now cut the price of their fixed-rate home loan products to 20-plus-year lows. Unsurprisingly, auction clearance rates are reinvigorating," he added.