Economist’s forecasts vary considerably, which makes understanding what mortgage rates are likely to be by the end of the year, complicated. Although most mortgage rates are based on being a percentage above the cash rate, it means that choosing between a fixed rate home loan or a variable rate choice is very difficult.
Your mortgage broker in Rockingham will be able to share their experience and expectations because they are constantly dealing with banks and other lenders and are often getting a close sense to what will happen to the rates from these organisations.
What Do the Banks and Economists Predict?
When you look at the bank and financial institutions, the Bloomberg survey of the economists are suggesting, on average, that the cash rate will go down to 2.75% by the end of the year. Nevertheless, global bank HSBC is suggesting in their forecast that cash rates may go up from 3 to 3.25%. Macquaries are telling everyone that the cash rate could fall a full one percent with the year-end figure ending at just 2%.
Of those economists expecting a median rate of 2.75%, you will find experts from Westpac, Citi and JP Morgan.
A high number of economists are expecting the cash rates will stay exactly the same, at 3%, all the way through to the end of the year and this backing comes from both AMP Capital and the Commonwealth Bank. ANZ expect smaller cuts in the cash rate to bring the year-end figure to 2.5%
What Will Happen Beyond 2013?
To take a look further into the future and beyond the end of 2013, ANZ bank and FIIG securities are looking towards a cash rate of 2.5%, while Laminar Capital have targeted 4.25%, before the end of 2014.
Forecasting the median cash rate of 3.25% before the finish of 2014 is shared with very few banks or economists. The major banks, though, all agreed that a maximum cash rate of 3% is unlikely by the end of 2014, with the Commonwealth Bank expecting no changes whatsoever in the cash rate between now and the end of next year.
NAV is targeting 3%, Westpac, 2.75% and ANZ expects 2.5% to be the cash rate by the end of 2014.
There are various factors that may change these figures and the views of the economists and the banks. With the Reserve Bank of Australia’s target inflation figures expected to be between 2% and 3%, for the first quarter of 2013, this allows the capacity for the cash rate to be reduced further if the company requires it. Nevertheless, economists from all of the major banks agree that the rate will not be cut in May 2013.
If you’re thinking of talking to your mortgage broker in Baldivis to discuss your next mortgage acquisition, you should bear in mind that 13 of the major 27 economists are expecting a new quarter of a percent cut in the cash rate to 2.75%, but all the rest expect no particular change.
*As of press time, the RBA Board “decided to lower the cash rate by 25 basis points to 2.75 per cent, effective 8 May 2013.”