The managing director of a mortgage broker–owned home loan brand has said that the RBA “just needs to relax” on cash rate decisions.
Following the Reserve Bank of Australia’s decision to keep the official cash rate at its all-time low of 1.5 per cent this week, 1300HomeLoan managing director John Kolenda said that, while the lack of movement has provided “much needed stability for mortgage holders”, any future increases will “bite harder than previous adjustments to monetary policy”.
Adding to the said warning, Mr Kolenda said that the RBA has been increasingly indicating that it is unlikely to make further interest rate cuts, but needs to be “extremely careful” about lifting rates.
The managing director said: “It has been almost seven years since consumers have dealt with a rate rise from the RBA and any future increases will have a greater impact on household income and consumer sentiment than it has in the past.”
Mr Kolenda added that, while some economists are speculating on rate increases in 2018, it is unlikely that the RBA will act prematurely.
“The RBA just needs to relax and maintain its highly accommodative monetary policy stance.
“If the economy improves, it is inevitable that the cash rate may move north again, but hopefully any increases will be minuscule and implemented over a protracted period to avoid causing unnecessary panic among mortgage holders.”
He concluded that the low rate environment has led to a “highly competitive” lending environment, and that consumers should therefore be speaking to brokers about getting the most suitable loan for their needs.
Mr Kolenda said: “Complacency is the biggest problem for mortgage holders, and they should seek advice from a mortgage broker to find the most competitive interest rates on offer."
[Related: RBA makes cash rate decision]