Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Global challenges could mean lower interest rates: Kolenda

Subdued global economic growth could have a major influence on the Reserve Bank’s December cash rate decision, according to 1300HomeLoan managing director John Kolenda.

In particular, Mr Kolenda said the slowdown in China and the rest of Asia remains the big concern for the RBA and a strong argument for cutting rates next month and into 2016.

“There are other reasons for the RBA to reduce the cash rate from its current record low of 2.0 per cent in the months ahead,” he said.

Advertisement
Advertisement

“Mortgage holders have already seen their interest rates go up in recent times as the major banks and other lenders have been increasing variable interest rates from 15 to 49 basis points due to additional compliance and provisioning costs.

“The Sydney and Melbourne property markets – the only cause for concern domestically for the RBA to consider actually lifting its cash rate – are slowing and are now no longer a reason to keep rates on hold.”

Mr Kolenda said continued falls for the Australian dollar, weak commodity prices and subdued consumer confidence and business investment would also weigh on the RBA as it ponders lowering the cash rate for the first time since May.

“Of course, if the RBA does reduce its cash rate going forward, it remains to be seen how much of the RBA’s rate reduction is passed on by lenders,” he said.

Mr Kolenda said the RBA’s future cash rate decisions could be negated by the banks adhering to APRA’s regulatory requirements that will increase the cost of providing mortgages and make them the strongest in the world.

“Further rate relief from the central bank may also not be passed on in full by lenders, and we may see increases in rates across the board due to potentially increased funding costs and pressure on the major banks to meet the APRA requirements by mid-2016.”

Global challenges could mean lower interest rates: Kolenda
mortgagebusiness

Latest News

Firstmac managing director Kim Cannon is “disappointed” that Treasury rejected the non-bank’s proposed acquisition of Maleny Credit Un...

Asset finance group Consolidated Operations Group has announced that it will “scale back” its equipment leasing but will continue its as...

Half of Australian businesses have already been hit by the economic fallout from the coronavirus outbreak, with approximately 86 per cent ex...

FROM THE WEB
podcast

LATEST PODCAST: The rush to save small businesses

Do you think Australia will move to quantitative easing this year?

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Mortgage Business.

Read more

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.