Interest rates tipped to stay at record lows for a decade

Property Prices

Interest rates will stay at record lows for the next ten years, according to a large broker network.

John Kolenda is managing director at 1300HomeLoan says the RBA cash rate of 1.75 per cent is more reflective of how interest rates will look for the foreseeable future with consumers now more sensitive to the impact of rate hikes.

“We are unlikely to see official interest rates move to pre global financial crisis (GFC) levels and the standard norm of the future will be lower than historical levels for the next decade,” he told Australian Broker.

“The monetary policy game has changed and the RBA has found cutting its cash rate is not necessarily an instant remedy for economic stimulus.”

Mr Kolenda said if the RBA lifted the cash rate it would have disastrous consequences and would damage consumer confidence and the economy as a whole.

Mr Kolenda believes the RBA will cut interest rates again in fact.

“Consumers are now very rate sensitive and when they rise they are likely to stop spending and revert to saving.”

“This is why we will see rates remain at historical lows or around levels we have experienced for the last number of years,” Mr Kolenda told Australian Broker.

“The GFC has been a game changer as far as interest rates are concerned and it’s hard to imagine when they could ever return to those pre-GFC levels.”


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