Majority of borrowers expect rates to remain on hold this week: survey
The majority of borrowers (55%) expect the RBA to leave the cash rate unchanged at 3% at its monetary policy meeting on Tuesday (February 5).
But demonstrating perhaps confusion among homeowners about the future direction of interest rates, a large proportion (44%) expects the RBA to lower rates to record lows.
These were the findings of an online survey of 452 respondents carried out by mortgage broker Loan Market, who asked the question ‘What action do you think the RBA is going to take at its February meeting?’
Loan Market survey results:
- Lower rates 25 bps 35%
- Lower rates 50 bps 9%
- Raise rates 25 bps 1%
- Leave rates unchanged 55%
Nearly one in ten borrowers are hopeful of an unlikely 50 basis point rate cut, which would take the cash rate to an all-time record low of 2.5%
“It’s very likely the RBA will apply the same wait-and-see approach, it demonstrated throughout 2012 at its meeting next week,” says Loan spokesman Paul Smith
“Most economic indicators are within targeted ranges and it appears home owners aren’t convinced the RBA has enough evidence to lower interest rates,”
“The December rate cut certainly did help inject some confidence into areas of the economy and help spending and consumption over the holiday period. But like most interest rate movements, it takes time to assess the full impact as more data becomes available,” he says.
Smith says that these results could indicate that households do not expect the economy to grow on the heels of RBA rate cuts alone.
“Households have seen four rate cuts in the past year yet housing finance remains flat and sentiment remains quite cautious. If the government is looking to promote confidence in the economy it should look to ease concerns about the two-speed economy or home building,” he says.
