RBA rate cut would have minimal effect on lending rates

RBA rate cut would have minimal effect on lending rates
Joel RobinsonDecember 7, 2020


We think the RBA will leave rates on hold today but keep the door open for more easing depending on the outcome of the budget and other economic news in the coming weeks, particularly the inflation numbers due in a couple of weeks.

Our focus is more on the liquidity measures as they have a direct impact on lending and investment. 

Our data suggests that investors are starting to move into the real estate investment market as low rates start to bite into both their savings and future cashflow projects.

Early signs are of a faster than expected Melbourne recovery, but we’ll get a better idea of this trend in coming months. 

Bottom line: Future cuts will have a minimal impact on market lending rates, particularly to ordinary real estate investors.

But liquidity measures loosening or tightening are perhaps more important.

Bond yields are pricing in a lower for longer rate scenario and we think a November cut is more likely than October.

Talk must be followed by action. 

Stephanie Davies is the investment director at Wealthi.


Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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