The Reserve Bank is now expected to cut the Official Cash Rate two more times this year to 1.0 percent by mid-November as the global economy slows and business confidence slides to 10-year lows.
But the jury is out on how much of it will translate through to lower mortgage rates, given banks are under pressure to lift their profits to get ready for higher capital requirements. There’s also a concern that banks won’t be able to pass on the rate cuts to term depositors. That’s because the banks now need to keep savers happy due to Reserve Bank funding rules designed to stop the banks going for cheap ‘hot’ 90-day funding overseas.
There are headwinds and tailwinds for the housing market and mortgage rates coming from all directions.
But the jury is out on how much of it will translate through to lower mortgage rates, given banks are under pressure to lift their profits to get ready for higher capital requirements. There’s also a concern that banks won’t be able to pass on the rate cuts to term depositors. That’s because the banks now need to keep savers happy due to Reserve Bank funding rules designed to stop the banks going for cheap ‘hot’ 90-day funding overseas.
There are headwinds and tailwinds for the housing market and mortgage rates coming from all directions.
