Bank rises spur rate cut rumours
MOST home loan customers expect the Reserve Bank of Australia (RBA) to lower official interest rates next week in response to lenders lifting their variable rates independently, a survey has found.
The Loan Market poll which asked "How much influence do you think recent rate rises by lenders will have on the RBA decision in March?' found 44 per cent believed it would be a significant driver for a rate reduction.
Loan Market corporate spokesman Paul Smith said 27 per cent of the 832 online poll respondents thought it would be a factor among other considerations for the RBA on Tuesday.
He said 24 per cent of those surveyed thought it would have no influence on the RBA board while five per cent said it was too hard to call.
"Many Australians expect the RBA to react to lenders ignoring its decision to leave the cash rate on hold at 4.25 per cent last month and independently lifting their variable rates by modest amounts," Mr Smith said.
"More than 70 per cent of our respondents are anticipating a counter attack from the central bank with almost half of those surveyed expecting a strong response from the RBA by cutting the official rate.
"That would put a lot of pressure on lenders to follow suit even though they have cited the current high cost of funding and overseas market conditions as the reason to increase their variable home loan rates.
"While the fundamentals of the Australian economy remain quite strong and consumer sentiment has been improving, sections of the economy can only benefit from the stimulus provided by lower interest rates."
Loan Market survey results:
How much influence do you think recent rate rises by lenders will have on the RBA decision in March?
- 44% - It will be a significant driver for a rate cut
- 27% - It will be a small factor among many to consider
- 24% - No influence at all
- 5% - Too hard to call
