Those hoping for an early Christmas present in the form of a cash rate cut will be disappointed with the likely outcome of Tuesday’s (1 December, 2015) Reserve Bank meeting, with leading experts and economists unanimous in expecting the cash rate will remain on hold at 2 percent, according to one of Australia’s leading comparison websites, finder.com.au.
All 33 experts and economists in the finder.com.au Reserve Bank Survey, the biggest of its kind in Australia, believe there will be no change to the cash rate, with most of the panel citing an improving economy as the likely factor behind the RBA’s decision to keep the cash rate on hold.
However, Australians may not have to wait too long for a rate cut, with 15 percent of experts (five of 33) predicting a rate drop in February, the first Reserve Bank meeting of 2016 – Shane Oliver, AMP Capital; Richard Robinson, BIS Shrapnel; Paul Bloxham, HSBC; Matthew Peter QIC; and Noel Whittaker, QUT.
Bessie Hassan, Consumer Advocate at finder.com.au, says that, despite recent movements within the home loan market, an official cash rate rise is unlikely in the near future.
“While recent out of cycle rate hikes by 13 lenders came into effect last week (20 November, 2015), the official cash rate is expected to stay put for the time being, with almost three in five experts surveyed (58 percent) believing the cash rate will not rise for at least the next 12 months.
“These recent rate increases will, however, put a dampener on Christmas shopping according to one in four (26 percent) of the experts surveyed, who say the busiest spending season of the year will be affected by the rate hikes.”
Experts were divided when it came to the future behaviour of house prices; while almost three in five experts (58 percent) are predicting property prices to rise in 2016, 29 percent believe prices will drop next year.
Interestingly, 38 percent of experts predict a decrease in demand for residential property in 2016, while 34 percent predict an increase in demand.
Almost half of these experts (45 percent) are also expecting rents to rise next year, while 42 percent say rents will remain the same and 13 percent think the rental market could lose steam with rents to fall.
“This indicates that, regardless of demand, property prices as well as rent are expected to rise in value in 2016, which is great news for property owners but less so for those looking to break into the ever-competitive market,” says Ms Hassan.
“The message here is, it’s not expected to get any easier, which is why it’s more important than ever to make sure you do your homework when it comes to researching home loans. Jump online and compare interest rates and product offerings, and get a pre-approval to put yourself in the best position to become a property owner in 2016.”