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Variable home loan rates are expected to stay at highest lows for some time yet.
BORROWERS can rest easy that the cash rate will not move again until 2018, keeping variable rates at record lows for some time yet.
AMP chief economist Shane Oliver said soft economic conditions will be around for several years which includes the fallout from the downturn in mining and slowdown to the housing sector, leaving the cash rate unchanged at two per cent.
“The economy is OK but it’s not fantastic,’’ Dr Oliver said.
“It’s hard to see a rate hike even next year or until 2018, the cash rate is likely to remain unchanged.
“But I would still be cautious, there is arguments about taking on too much debt.â€
AMP chief economist Shane Oliver expects the cash rate to stay on hold until 2018.Source:News Limited
The Reserve Bank has kept the cash rate on hold at two per cent since May last year — it has fallen to this historical low since it began its downward serial from 4.75 per cent in October 2011.
But borrowers should be mindful some lenders could make out-of-cycle rate hikes — just last week the Bank of Queensland announced it would be hiking rates outside of any cash rate moves, pushing variable loans rates up by 12 basis points for owner occupiers and 25 basis points for investors.
The financial regulator, the Australian Prudential and Regulation Authority, revealed its crackdown on lending practices, which required the major banks to offset costs that require them to hold more capital against home loans.
St George economist Hans Kunnen isn’t forecasting a cash rate move until June 2017 and seeing variable rate loans back around the average of seven per cent is “a long way off.â€
St George chief economist Hans Kunnen said variable home loan rates will remain relatively low.Source:Supplied
Analysis by financial comparison website RateCity shows the average variable home loan rate is 4.75 per cent and the monthly repayments are $1547.
For a three-year fixed loan the average rate is 4.37 per cent and the monthly repayments are $1497.
RateCity spokeswoman Sally Tindall expects to see a cash rate fall sometime this year, followed by a potential rise in 2017 bringing it back to the two per cent mark.