Since November, the OCR has remained at a 13-year high of 4.35%, a consequence of RBA’s unprecedented rate-hiking cycle aimed at combating rising inflation.
Despite challenging global economic conditions, Bednar predicts a 25-basis point reduction in RBA’s cash rate to 4.1% – a forecast echoed by all four big banks
Bednar highlighted key economic trends that support the potential for rate cuts.
“With underlying inflation trending downwards to 2.4% in the December quarter and unemployment trending slightly upwards, I expect the RBA to lower rates in February by 25 basis points,” he said.
Bednar noted that while mortgage holders are facing persistent living expense pressures, any rate decrease would be beneficial.
The Finsure CEO also speculated on the broader implications of a rate cut.
“I expect another rate cut mid-year as the RBA assesses how the February reduction impacts consumer spending and inflation,” Bednar said.
“I think a reduction in February will invigorate consumer interest in house purchasing and selling, but this could add additional pressure to home prices for those wanting to enter the market.”
He suggested that these dynamics could influence political stances on home affordability and supply as the federal election approaches, potentially affecting voter decisions.
Bednar cautioned that while the RBA might reduce rates, banks might not pass on these cuts in full to consumers.
“Banks are vocal in their position to recover margin given their funding pressures, so they may decide to retain some of the RBA cuts,” he said.
This factor could temper the full potential impact of RBA’s monetary policy adjustments on borrowers.
For mortgage brokers, Bednar sees the potential rate cuts as a significant opportunity.
“Any rate cut will provide an exciting opportunity to capitalise on increased consumer interest and offer refinance opportunities,” he said.
Bednar believes that these changes could significantly benefit the mortgage broker sector, providing a much-needed boost to the industry.
