A prominent banking analyst has warned that by cutting interest rates to a fresh record low, the Reserve Bank of Australia (RBA) risks sparking a surge in housing prices that could form a volatile price bubble, according to The Australian Financial Review.
UBS analyst Jonathan Mott warned over the impact of record-low mortgage rates, saying the “ingredients are now in place for another bout of sustained house price inflation in Australia and Sydney in particular”, the AFR reported.
“Given Aussie housing is already expensive by most metrics we see this as undesirable and dangerous.”
Meanwhile, ANZ economist Warren Hogan reportedly said the latest cut to 2.5 per cent should be the last cut made by the central bank, saying “...if there's more ... there's trouble on the horizon for Australia's economy.”