Growing consensus that rates won’t move for the rest of this year as lending regulation bites
Growing consensus that rates won’t move for the rest of this year as lending regulation bites
The RBA’s cash rate will remain at 1.50% for the rest of 2017, according to a growing number of economists.
Although the RBA still has six more opportunities to move the cash rate, yesterday’s decision to hold, which pointed to APRA’s recent restrictions on lending, has been seen by many as ruling out further movements.
In his statement RBA Governor Phillip Lowe pointed to “the recent supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders have also announced increases in mortgage rates, particularly those paid by investors and on interest-only loans.”
“Much would need to go wrong at home and/or abroad for the Reserve Bank to cut rates again”
In March APRA instructed banks to reduce interest-only lending to 30% f new residential mortgage lending, in addition to the existing 10% growth cap on lending to investors.
“Much would need to go wrong at home and/or abroad for the Reserve Bank to cut rates again,” wrote CommSec chief economist Craig James, in response to the RBA’s decision, “Interest rates are at record lows and neither consumers nor businesses are keen to take up new loans.”
CommSec, alongside HIA senior economist Shane Garrett, expects there to be no further rate changes in 2017. In fact, 74% of the 30 economists and experts convened by comparison site Finder.com.au also believe the next cash rate move will be in 2017.
"Sectors of the economy other than housing seeming need interest rates set at a lower level to what they currently are"
80% of the panel believe that when rates do move they will rise, although just 4 of the panel saw rate rises in October to December this year.
Not all experts agree rates will increase. In advance of the cash rate call, Corelogic’s head of research Tim Lawless noted that “A longer trend of slowing value growth and overall softer housing conditions will lend further support to the notion that house price growth has moved through its cyclical peak and may take some pressure away from the RBA to keep rates steady especially given that other sectors of the economy other than housing seeming need interest rates set at a lower level to what they currently are.”
The RBA’s cash rate will remain at 1.50% for the rest of 2017, according to a growing number of economists.
Although the RBA still has six more opportunities to move the cash rate, yesterday’s decision to hold, which pointed to APRA’s recent restrictions on lending, has been seen by many as ruling out further movements.
In his statement RBA Governor Phillip Lowe pointed to “the recent supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders have also announced increases in mortgage rates, particularly those paid by investors and on interest-only loans.”
“Much would need to go wrong at home and/or abroad for the Reserve Bank to cut rates again”
In March APRA instructed banks to reduce interest-only lending to 30% f new residential mortgage lending, in addition to the existing 10% growth cap on lending to investors.
“Much would need to go wrong at home and/or abroad for the Reserve Bank to cut rates again,” wrote CommSec chief economist Craig James, in response to the RBA’s decision, “Interest rates are at record lows and neither consumers nor businesses are keen to take up new loans.”
CommSec, alongside HIA senior economist Shane Garrett, expects there to be no further rate changes in 2017. In fact, 74% of the 30 economists and experts convened by comparison site Finder.com.au also believe the next cash rate move will be in 2017.
"Sectors of the economy other than housing seeming need interest rates set at a lower level to what they currently are"
80% of the panel believe that when rates do move they will rise, although just 4 of the panel saw rate rises in October to December this year.
Not all experts agree rates will increase. In advance of the cash rate call, Corelogic’s head of research Tim Lawless noted that “A longer trend of slowing value growth and overall softer housing conditions will lend further support to the notion that house price growth has moved through its cyclical peak and may take some pressure away from the RBA to keep rates steady especially given that other sectors of the economy other than housing seeming need interest rates set at a lower level to what they currently are.”
