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Two prominent industry figures have had their say on the Reserve Bank’s decision to leave the cash rate on hold at its monthly board meeting yesterday.
As expected, the RBA announced it would leave the cash rate at a record-low 2 per cent, where it has been since May.
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John Kolenda, managing director of 1300HomeLoan, said that while the RBA has kept the cash rate steady, a range of other developments have changed the goal posts for thousands of borrowers, causing unprecedented confusion.
Mr Kolenda said the decision of the major banks and other lenders to raise interest rates for investment loans as well as revised borrowing conditions means the RBA’s rate deliberations have become almost irrelevant for some borrowers.
“In the history of home loan lending, it has never been more confusing for borrowers and without proper consultation, it is easy to make a very costly mistake,” he said.
“Not only does this apply to consumers looking at taking out a home loan, but those recently affected by the changes.”
Paul O’Regan, chief operations officer at LJ Hooker Home Loans, said while a rate cut would have benefitted housing markets in capital cities such as Perth, Adelaide, Hobart and Darwin, changes to investor lending could help to cool down east coast property prices.
“I just don’t think there [are] enough compelling reasons for a reduction, whilst it would be favourable for markets outside of Sydney,’’ he said.
“A rise at this stage is also not justified with latest economic figures and with consumer sentiment being a bit depressed – I think the safe haven for the RBA is to just stay where they are at.”
Mr O’Regan said he does not rule out a rate cut by the end of the year, but believes any reduction now would be counterproductive to the tightening of investment loans.
[Related: RBA decision ‘made sense’, says Flavell]
