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Steven Cross
Almost 50 per cent of brokers believe the cash rate will fall as low as 3 per cent before year’s end.
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According to The Adviser’s latest straw poll, 47.8 per cent of brokers believe the cash rate will sit between 3 and 3.25 per cent by December.
Of the 364 respondents, just 6.6 per cent of brokers expect the cash rate to rise before the end of the year.
These statistics align closely with a recent survey conducted by 1300HomeLoan, which found two thirds of brokers believe the RBA will cut the cash rate to stimulate the economy.
65 per cent of brokers felt the recent 0.5 per cent cash rate reduction would not give the economy the necessary stimulation, and as such, more rate cuts need to be made.
A further 30 per cent said the cash rate cut would do “almost nothing”.
1300HomeLoan managing director John Kolenda said the survey highlighted the fact that pessimism still ruled in the residential property market and more help was needed from the RBA.
“With Europe looking like a train-wreck, China slowing and our retail and building sectors stagnant, all buyers are getting right now is bad news on the economy,” Mr Kolenda said.
“Consumers including homebuyers are developing a siege mentality and only action that really puts some money back in their pockets such as repeated interest rate cuts is going to fix that.”
While brokers would not only like to see a further rate cut, but believe the chances of reciving one or more are high, it seems not everyone agrees – with one economist forecasting a rate hike.
Speaking to The Adviser, Australian Property Monitors’ Andrew Wilson said the Australian economy is a lot stronger than people think.
“We’re seeing population growth in Western Australia starting to grow with workers going after higher wages; we’ve seen wages increase around 4.5 per cent annually in the latest ABS data in WA,” Mr Wilson said.
“The unemployment rate is now starting to head to the low threes in WA, and all these conditions are ripe for inflationary outbreaks so these are all part of the considerations the reserve bank has to make.
“The economy does generally remain strong. I think that with what looks like a downward trend in the dollar that will help to stabilise some of the adjustment processes going on in sectors that have suffered from the high dollar.
“We have a good unemployment number for April, I would suggest it’s a 50 50 bet we’d get another [cash rate] rise in the short term. I still think the RBA is carefully watching and hasn’t made a decision yet.
“But of course the stock market was shaking up last week, it will be interesting to see how the stock market recovers this week.”
