Interest Rate Cuts to Continue this Year

As you already know, the real estate and housing markets have been somewhat unstable in recent years—there are times when the market is alive, but there are also occasions when the industry is less than ideal for home buyers and property investors. Because of this, economists from all around the world are trying to make sense of the past, present and future of the market. Although many believe that there are going to be rises this year, one of the conclusions that has been reached by one of the top thinkers in the field is that the interest and cash rates are expected to be cut again this coming year.

Interest Rate Cuts to Continue this Year

Cutting Back

Last year, interest rates plummeted to an all-time low, with the current interest rate resting at 2.5%. According to most current projections, interest rates are expected to level off this year with the possibility of a slight rise toward the end of the year. However, the Chief Economist at Westpac, Bill Evans, surprisingly predicts that rates will be cut further and could be down to as low as 2% by the end of the year.

Evans may have a contrarian point of view, but he has a sound track record of being one of the most accurate forecasters of interest rates in Australia throughout the post-GFC economy.

The Future

Evans’ status as Chief Economist at Westpac affords him a unique view of the economy. Westpac has millions of dollars at stake on the accuracy of his opinions and projections. Evans bases his prediction on an unemployment rate he projects to climb to 6.5%, combined with what he sees as a “weak world economy”.

What It Means to You

There are some areas as well that are expected to have good property markets despite these cuts. Western Australia will continue to see good fortune from the still lingering effects of the mining boom. Even as the resource industry goes through its “correction” phase, Geraldton has become a mining hub. We can only see this getting better.

Going Steady

Cash and interest rates may or may not go down in 2014, but strong resource industry areas will continue to see good property markets and continue to develop stronger infrastructure. In other words, real estate will also continue to prosper in WA and the Geraldton area.

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