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The Reserve Bank is expected to lift rates during the first part of the year and then keep them on hold at 4.5 per cent, according to Westpac.
In Westpac’s weekly economic report, the bank said the Reserve Bank would keep its cash rate steady throughout most of 2010 in a bid to generate momentum in the housing sector.
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The housing sector remains resilient despite a drop in housing finance last November.
“Even with the 5.6 per cent drop in November, owner-occupier finance remains at historically high levels,” the report said.
“RBA interest rate rises will act as a headwind for housing finance in coming months.”
According to the report, demand for housing surged last year thanks to a “favourable combination of historically low interest rates, government incentives, strong population growth and pent-up demand for housing stock”.
