Most home loan customers are counting on the Reserve Bank of Australia (RBA) to lower official interest rates today at its May monthly meeting, a survey has found.
The Priority Lending poll which asked “What action do you expect the RBA to take at its next meeting in May?’ found 88 per cent believed there would be a rate cut.
Priority Lending corporate spokesman Paul Smith said 65 per cent of the 974 online poll respondents expect a quarter percentage point reduction while 23 per cent thought there could be a 50 basis points cut.
He said 12 per cent of those surveyed thought the RBA could continue to sit on the sidelines while no respondents thought there will be a rate rise.
“Consumer sentiment is clearly expecting some much needed interest rate relief from the RBA,” Mr Smith said.
“The majority of our respondents are anticipating a cut of 25 basis points.”
Mr Smith said a rate cut is essential to revive struggling sectors such as retail and housing.
“We’ve got most indicators pointing towards a rate cut tomorrow and any action other than that would be a let down for many consumer groups and struggling sectors,” he said.
Mr Smith said the RBA has left the rate cut off the table as long as it possibly could while waiting to see if economic activity would rebound without a rate cut.
“It’s fairly clear the RBA’s wait-and-see approach in the past several months was to assess the impact of some fairly significant market movements, however it’s now clear from all angles, the economy needs a boost,” he said.
Mr Smith said the only uncertainty over the direction of home loan rates is whether lenders again move independently of the RBA’s decision.
“Even though lenders have been dealing with a challenging funding environment, the RBA still has significant influence over the home finance market and it would be a major surprise if a rate cut was not passed on,” he said.
Priority Lending survey results:
What action do you expect the RBA to take at its next meeting in May?
Rates lowered by 25 bps – 65%
Rates lowered by 50 bps – 23%
Unchanged – 12%
Rates to rise – 0%
Source: Priority Lending
