LOW INTEREST RATES TO REMAIN 'FOR YEARS TO COME'
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Australia will continue to have “low interest rates” for “years to come”, the founder of Aussie Home Loans has predicted, adding that housing is “still the most attractive form of safe investment that Australia has ever had”.
Speaking at the brokerage’s bi-annual conference on the Gold Coast on Monday (28 August), Mr Symond said: “I think these low interest rates are going to remain low for years to come.... That doesn’t mean interest rates aren’t going to edge up in six months or 16 months, but they’re not going to go up [by] 3 per cent, let me tell you.
"We have adjusted to a low interest rate environment by comparison, and I think it will remain as it is. But that doesn’t mean that rates won't go up by 1 per cent or 1.5 per cent over three years ... it will still be very affordable to an asset class of $7 trillion."
He continued: “[Housing] is the greatest asset that this country has ... it's got so much going for it. Yes, I think there might be some changes there over the next two, three, or four years, but whichever way you look at housing, it is still the most attractive form of safe investment that Australia has ever had.”
Ian Narev, the chief executive officer of the Commonwealth Bank of Australia (CBA), also spoke at the Aussie conference and said that ensuring consumers can repay mortgages, especially interest-only loans, is still the “main priority” for both banks and brokers alike.
“The main priority we all have — and this really starts with the people in this room, and as a bank, and Aussie, we have a role to play in this, too — is to make sure that we are helping our customers be in a situation where they can still pay the mortgage if rates go up, and they can still pay it while living their lives roughly the way they want to live it.
Noting that the buffer is about 2.5 per cent currently, Mr Narev added that brokers "obviously have to be careful never to stray into financial advice”, but added that the conversation brokers need to have with customers is: “If rates go up — and we know from the test that you are going to be able to afford it — but what are you going to need to stop in order to repay, assuming your wages aren’t going up? And is everyone comfortable with the levels of debt?”
He added: “If the people in this room and the people in the banking system are doing the right thing by the customers, if they are thinking about the long term and having the conversations with the customers to make sure that [if] rates could go up, they will be comfortable, then the lender is going to do it.”