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The managing director of a broking group has said that he believes a future cash rate drop from the Reserve Bank is “much more likely” than an increase, amid out-of-cycle rate hikes from several lenders including Westpac.
1300HomeLoan’s managing director, John Kolenda, has said that he expects that the Reserve Bank of Australia (RBA) may have no choice but to keep the cash rate on hold for the longer term, with an increase now more likely, with funding pressures prompting lenders to lift interest rates out of cycle.
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“The increases in rates independently of the RBA means the official rate will be staying on hold, with a future downward movement from the central bank now much more likely than a rate hike,” Mr Kolenda said.
The head of the broker group echoed comments made by economist at Market Economics Stephen Koukoulas and senior economist at AMP Capital Shane Oliver, who told The Adviser’s sister publication, Mortgage Business, that a reduction in the cash rate was “highly conceivable”.
Mr Koukoulas said: “It’s still highly conceivable that the next move in rates is down, not up, and that would take an about-face from the RBA who have said the exact opposite.”
Mr Oliver added: “I wouldn’t advocate a cut at this stage, because I don’t think things are that bad, but I certainly wouldn’t rule it out at some point down the track.”
Further, Mr Kolenda noted the challenges faced by borrowers in a increasingly challenging lending environment, adding that borrowers would be best equipped to escape mortgage prison through the use of a broker.
“It’s more important than ever though for mortgage holders to be on top of their home loan, and with the expert assistance of a mortgage broker, they can make sure they are getting the best deal possible,” Mr Kolenda added.
“The main message in the current climate is not to be complacent about your home loan. Don’t become a mortgage prisoner. Seek advice from a mortgage broker to make sure your loan is working for you.”
[Related: FBAA slates ‘toothless tiger’ APRA as more lenders hike rates]
