1300HomeLoan adds voice to crowd of rate cut forecasters

1300HomeLoan adds voice to crowd of rate cut forecasters
Jennifer DukeDecember 7, 2020

With a number of experts now tipping a rate cut next year, 1300HomeLoan’s managing director John Kolenda is adding his voice to the crowd.

In fact, he notes that with significant drops to consumer confidence the evidence for a potential cut is becoming increasingly compelling.

The Westpac-Melbourne Institute survey of consumer sentiment is now at the lowest point in more than three years, he said.

This drop offsets a slightly better than forecast rise in the number of home loans in October – at 0.3%, 0.2% higher than expected.

“There’s growing expectations that the RBA will have to further ease its cash rate in the coming year due to deteriorating economic conditions and all eyes will be on how the retail sector fares over Christmas,” said Kolenda.

“Consumers are worried about the outlook for the economy and job security. Negativity about the federal government’s ability to get its budget measures through the Senate has also weighed on the minds of consumers.”

“Unlike other central banks around the world, the RBA has plenty of room to play with and the question may be when they have to act next on rates, not if,” he said, noting that the falling Aussie dollar may also cause a drop.

Yesterday NAB’s Alan Oster suggested that up to three rate cuts may be seen next year.

In October, every expert surveyed in Finder’s monthly Reserve Bank Survey tipped the next rate movement to be up. Since then, the number of experts expecting a cut has been on the rise. Here are the other experts expecting a drop.

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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