Broker News

Rates to rise in 2017: Flavell

Mortgage Choice CEO John Flavell expects lenders to continue lifting interest rates throughout 2017, and has flagged the possibility of a cash rate increase by the RBA.

Flavell points to the US Central Bank increasing the Federal Funds rate by 0.25% to 0.75%, and its announcement that the rate could rise to 0.75% throughout 2017.

“This announcement, combined with the fact that many of Australia’s lenders have started to raise rates across their suite of home loan products, would suggest a cash rate increase by the Reserve Bank of Australia is now more of a possibility than not in 2017,” he notes.

Despite this, Flavell highlights any rate rises are likely to be small, which will help keep the cost of borrowing affordable.

“As a result, I would expect certain parts of the property market to remain strong,” he adds.

According to Flavell, despite many lenders tightening their policy in the last 12 months, the competition in the owner-occupier and investor segment remains strong.

“Furthermore, unemployment remains low by long-term standards. With all of this in mind, I wouldn’t be surprised to see continued growth in property prices across some markets – specifically Sydney and Melbourne,” Flavell says.

“While the level of growth may not be as strong as we have seen in recent years, overall, we can expect to see growth continuing.”

 

Published on: Monday, December 19, 2016

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