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It is a 'dead certainty' rates will fall

It is a 'dead certainty' rates will fall

by Staff Reporter 0 comments

An expert real estate commentator has said it is all but certain interest rates will be cut by April 2015.

The official cash rate has remained at a record-low 2.5 per cent since 2013, but both Westpac and NAB forecast last month that the cash rate would fall to at least 2.0 per cent in 2015.

SQM Research managing director Louis Christopher has become the latest expert to forecast a rate cut this year. Mr Christopher said a rate cut would be triggered if – as he expected – the prudential banking regulator, APRA, imposed investor lending restrictions in 2015.

“They will do this in an attempt to reduce risky, speculative investor behaviour, particularly from those who should not be taking on large amounts of housing debt due to their limited capacity to pay it back,” Mr Christopher said.

“However, if APRA does move, it could potentially open the way for the Reserve Bank to make rate cuts, possibly more than the standard 25 basis points.

“It’s clear to most the economy is weak and, if it wasn’t for the threat of a national surge in house prices, rates would most likely be lower today.”

Mr Christopher said “the markets think it’s a dead certainty rates are going to be cut by April 2015” and expect another reduction in June.

“If such rate cuts happen, housing markets would be boosted throughout the course of the calendar year, with most cities recording growth at the top end of our forecast ranges,” he said.

It is a 'dead certainty' rates will fall
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