RBA not likely to cut interest rates in March.Sunday 03 March 2013
Article by Kevin Boyle
Home loan owners may have to take it upon themselves to lower interest rates in March, as a rate cut by the RBA is not likely.
A positive forecast for business investment for the next financial year and a rise in home sales is easing pressure for the RBA to cut rates this month, reports the Sydney Morning Herald.
And according to the Australian Bureau of Statistics, just 18 percent of the financial market are expecting a rate cut tomorrow. Of 13 economists surveyed by the AAP, there was also a unanimous prediction that the RBA is not likely to cut rates in it's March meeting. However, a majority still expect that there will be further rate cuts later this year. St.George economist Janu Chan believes that the next rate cut is likely to be in April.
"We think there's room for one more rate cut given that inflation's quite subdued, growth is expected to be below trend this year, and also the labour market remains quite soft," she said.
Due to the nature of interest rate cuts not having an instant effect on the economy, often taking a number of weeks, even months, before taking hold, the RBA will likely wait to see the impact of previous rate cuts before making any further decisions, according to Janu Chan.
Even though the Housing Industry Association have recorded an increase of 4.2 percent in new home sales for January, the fourth consecutive month of growth for the industry, and that capital expenditure outlook is still looking positive, there are still indications that a lowering of interest rates may still be required to stimulate the non-mining economy.
"There's still no clear growth joy for the RBA in these figures and room for them to ease further," said the NAB's chief economist David De Garis when speaking on last weeks results on the Capex forecast by the Australian Bureau of Statistics.
While an interest rate cut is not likely tomorrow, a home loan comparison will show that many Australians are paying unnecessary high interest rates on their home loans. By comparing all mortgages available on the market, homeowners could potentially save thousands of dollars on home loan repayments as well as knocking years off the lifetime their loan, simply by choosing a better home loan.
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