The RBA left the official cash rate at 1.5 per cent in August, marking the 22nd consecutive meeting that the RBA has not changed its rates. Westpac is set to increase its variable home loan rates by 14 basis points from 19 September, a move that will affect all new and existing customers.
It is not their only divergence from the RBA, which is expecting growth of 3.25 per cent with consumer spending at around 3 per cent.
But Westpac senior economist Andrew Hanlan said Westpac is instead forecasting lower growth of 2.5 per cent and weaker consumer spending.
“Current challenges and uncertainties are likely to persist in our view, notably weak wages growth, with consumer spending expected to slow to 2.5 per cent,” he said.
Mr Hanlan said that the historic highs of home building activity will slow down during 2019 but that wouldn’t bring down prices.
“At the same time, house prices are likely to remain under pressure given tighter lending standards,” Mr Hanlan said, adding that the political unrest in Australia also played a part in the Westpac’s predictions, as did the global environment.
“The global backdrop is expected to be less favourable, as world growth moderates and with commodity prices forecast to ease from current elevated levels,” he said.
