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James Mitchell
The decision by a number of lenders to slash fixed rate mortgages is a signal that interest rates could be cut as early as October, one economist has claimed.
Speaking with The Adviser, AMP Capital chief economist Shane Oliver said a cut in fixed rates is a natural indication that the Reserve Bank would drop the cash rate.
But, even if the RBA did decide to cut rates as early as next month, Mr Oliver said it would take some time for buyer confidence to return to high levels.
“Things will probably remain pretty soft in the housing market until Christmas and possibly into March of next year,” Mr Oliver said.
“But then the positive effect of low interest rates will offset the negative impact of a slight rise in unemployment and continued uncertainties internationally,” he said.
“So things will be a little softer in the short term, but then we’ll start to see stronger conditions in the residential market from mid next year.”
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