RBA rates could stay low for another year

OFFICIAL interest rates are likely to remain at a record low for at least another year with the Reserve Bank of Australia (RBA) mindful of the weaknesses in the domestic economy and fragile consumer confidence, says mortgage broker network 1300HomeLoan.

1300 HomeLoan managing director John Kolenda said the RBA had maintained its cash rate at the all-time low of 1.5 per cent since its last movement in August, 2016, and could stay on the sidelines another 12 months.

“Despite some speculation of rate increases over the next year or so, the RBA has highlighted the fact recently that a range of negative factors will keep official interest rates low,” Mr Kolenda said.

“The central bank has noted the impact of the global financial crisis still lingers with sluggish company investment, low wages growth and weak inflation present.”

Mr Kolenda said any future upward rate movement by the RBA would have be taken with extreme caution due to the potentially disastrous impact on consumers and the wider economy.

“Future RBA rate movements are likely to be slow and implemented over a protracted period to avoid causing unnecessary shockwaves,” he said.

Mr Kolenda said regardless of the RBA’s deliberations, mortgage holders should be more concerned about the continued out-of-cycle rate movements by the banks.

“Rate movements by lenders across various home loan products mean it’s more important than ever for consumers to be on top of their home loan and the interest rate they are paying,” Mr Kolenda said. “Although rates are at historical lows, complacency can still end up costing mortgage holders thousands of dollars a year. If you want the best deal, seek advice from a mortgage broker.”