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The CEO of one of Australia’s largest mortgage brokerages has said that, while the RBA has left the cash rate on hold for more than a year, given the current economic winds blowing across the country, the next move is likely to be a rise.
Mortgage Choice chief executive officer John Flavell said that it made sense for the RBA to leave the cash rate untouched until now, “given the level of economic uncertainty”, but that the situation is now beginning to improve.
“Indeed, over the last few months, we have seen significant improvements in both the domestic and global markets,” the CEO said.
“Domestically, business conditions have shown signs of improvement, the unemployment rate has fallen to a low of 5.4 per cent and property price growth has started to stagnate across some markets in line with expectations.”
Mr Flavell said that it is therefore “only fair” to assume that the next RBA rate movement will be up.
“When exactly rates will rise is very much undetermined,” Mr Flavell said. “And while we don’t know when exactly the cash rate will rise, we know it won’t take off at breakneck speeds and home loan rates will continue to be lower for longer.
“Interestingly, our data shows the majority of Australians also believe interest rates will remain low for the foreseeable future and will only steadily increase over the next 12 months.
Mr Flavell said that when asked what they thought would happen to interest rates throughout 2018, 52.5 per cent of Australians said they would rise, albeit slowly.
“The reality is, the cash rate will not remain at this level forever,” Mr Flavell said.
“It’s not a question of if, but when, the board decides the time is right to lift the official cash rate from its current historically low setting.”
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