Rate cuts forecast by Finder RBA survey experts
Over 75 percent of experts who take part in Finder's RBA cash rate survey now believe the next cash rate movement will be a cut.
It was only three months ago that nearly 80% of the panel said the next move would be a hike in rates.
All 31 experts and economists in Finder’s RBA cash rate survey are expecting a hold at 1.50% on Tuesday.
In the survey, some experts (9/17) forecasted the cash rate would drop to 1.00% before the year is out.
Graham Cooke, insights manager at Finder, said August and November were the most popular months for a forecasted cut.
“Last month, I said the drop to 40% (of economists who believe the next rate move will be upwards) was the most dramatic I had seen in four years of running this survey.
"This month, that drama is elevated with just one in four believing this to be the case.
“With the housing market continuing to tumble, and other global and international economic factors looking grim, experts seem to be sure we’re looking at at least one cut in 2019, if not two,” Cooke said.
Dr Andrew Wilson, chief economist at My Housing Market, said an easing of of the cash rate is overdue.
"Although recent wage data was reasonable – not good, not bad – RBA has conditioned the market to now expect a long-needed cut," Wilson said.
“This cut will attempt to revive consumption, which is now likely to also be impacted by continuing weaker housing markets."
Finder’s Economic Sentiment Tracker, which gauges five key indicators – housing affordability, employment, wage growth, cost of living and household debt – has also seen a significant shift.
This month’s tracker set three all-time marks, one positive and two negative.
Positive economic sentiment in housing affordability reached its highest level recorded, while positive sentiment for employment and wage growth dropped to their lowest levels.
Cooke said the economic sentiment and rate cut predictions signal good news for would-be mortgage holders, but a different story for savers.
“Potential first home buyers with a deposit saved are in an overwhelmingly advantageous position in this market. But it doesn’t all start and end with a purchase – any buyer needs to be taking a long-term view with their finances, and be shopping around online for the best possible home loan rate and features.
“As for savers, anybody who relies on their savings as a form of income, such as retirees, may soon be making far less interest on their nest egg – so now is the time to take action,” he said.
Cooke said savers need a new plan of attack if rates do indeed drop as forecast.
“Savers should start to plan for these cuts by looking into term deposits and considering researching different types of investment opportunities,” he said.
