Another month of sluggish home loan approvals highlights the compelling case for the Reserve Bank of Australia (RBA) to stop fence sitting and deliver a interest rate cut in May, says leading mortgage broker Priority Lending.
Priority Lending corporate spokesperson Paul Smith said the latest Australian Bureau of Statistics (ABS) figures for February 2012 show a 2.5 per cent drop in the number of home loan approvals from January 2012.
Mr Smith said the undercurrent of consumer caution indicates most economic sectors would welcome a decision by the RBA to lower the current cash rate of 4.25 per cent at its next board meeting on May 1.
“The simple truth is that the RBA ‘wait and see’ pattern the RBA is coming to a head, with a fleury of downward economic indications,” Mr Smith said.
Mr Smith said that a rate cut will be needed to revive stalled sectors that are clearly demonstrating they’ll need a rate cut for revival.
“According to the latest figures, consumer confidence has also fallen to its lowest level in eight months and sectors such as retail and housing are crying out for some action by the RBA.”
Mr Smith said the central bank’s next board meeting may still leave consumers uncertain over the direction of home loan rates due to lenders having a track record of moving independently of the RBA’s rate decisions.
But Mr Smith said that even though lenders are dealing with a challenging funding environment, the RBA still has significant influence over the home finance market and it would surprise if a downward rate movement was disregarded.
Source: Priority Lending
