Any RBA rate cut passed on in full won’t do much for property market: John Symond

Borrowers should expect the major banks to pass on an expected rate cut in full and swiftly, but with little impact on the property market, says Aussie Home Loans founder John Symond.

“People are cautious and sit on their hands around election time and the property market will just stagnate between now and Christmas,” Symond has told David Koch on Sunrise in his regular pre-RBA chat.

Symond suggested this period of stagnation “might be a good time to be out there and buying”.

While he expects little impact on the property market, given that interest rates are already at historic lows, he says a rate cut will be good for small businesses and general perception.

He expects the RBA to cut the cash rate today and for the banks to pass on the rate cut in full and in good time.

“There are no excuses for the banks not to pass on rate cut in full and I expect them to pass it all on pretty fast.”

But he does not expect that it will make a big difference for those out there looking to buy a house given the competition between investors and first-home buyers for inner city property in capital cities.

Symond says this part of the market is very active with first-home buyers having trouble getting into the market and competing with investors for properties prices between $500,000 and $600,000.

“[The yields on these properties] are very good and better than the more expensive properties,” he says.

As for the reasons the RBA will cut the cash rate to 2.5%, Symond says that while the economy is not falling off a cliff, it is “certainly showing signs that the steam is coming right out”.

“The RBA is worried the economy might get to a stage where it might stall, it needs to pump some energy into the economy and the best way to do that is to drop interest rates.