RBA cut risks dangerous price surge: UBS Jonathan Mott

A UBS banking analyst says the latest round of interest rate cuts by the Reserve Bank could put Australia at risk of a dangerous surge in house prices.

UBS's Jonathan Mott recently told the Australian Financial Review that record-low mortgage rates meant the “ingredients are now in place for another bout of sustained house price inflation in Australia and Sydney in particular.”

“Given Aussie housing is already expensive by most metrics we see this as undesirable and dangerous.”

The latest 25 basis point cut by the Reserve Bank was passed on in full by the banks including a bonus 28 basis cut by Westpac.

According to the Australian Bureau of Statistics capital city house prices are currently above their previous 2010 record high.

ANZ economist Warren Hogan recently predicted there was a growing debate about “how much frothiness we’ve got in the property market over the next year or so”.