The official cash rate is likely to remain on hold not only through 2018 and 2019 but also 2020, according to Westpac chief economist Bill Evans.
Evans has made the counter-consensus call that the Reserve Bank of Australia will keep interest rates on hold until 2021, defying RBA Governor Philip Lowe’s suggestion that the official rate will rise “at some point” in the near future.
Market economists see the cash rate increasing in the second half of 2019, but Evans has extended his forecast for no change in policy settings until December 2020 (he previously forecast no change until March 2020).
Evans notes that new lending to housing investors has fallen 25% over the last year; housing credit growth is likely to slow from 6.5% in the year to September 2017 to 4% in 2018/19 and 2019/20.
Earlier, Lowe told Australians to get their household budgets in order to prepare for higher rates “at some point” – it being almost eight years since the last increase.
The update that interest rates are likely to remain on hold until 2021, is great news for investors.
If you want to take advantage of the latest rates to invest in property, ensure to contact your Client Manager (existing clients) to see if you have a window of opportunity. Alternatively, if you’re not a current client you can get started by booking in for a FREE Planning & Strategy Session.
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