Aussie's Tip: 0.5pc Rate Cut

Sun Herald

Sunday March 21, 1999

DAVID POTTS

INTEREST rates will drop in the next three months, leading lender Aussie Home Loans has predicted.

"I expect within the next three months there will be another drop in rates worldwide by 0.25 per cent," managing director John Symond said.

He predicted the Reserve Bank would follow suit by cutting official rates which would flow on to home loans. His comments come as some lenders have been increasing fixed-rate loans by about 0.4pc.

Mr Symond has a track record of correctly predicting interest cuts, often - as is the case now - contrary to expectations.

Aussie Home Loans last week changed its source of funding and said it would form strategic partnerships.

"I can see another 0.5pc (cut) in two quarter lots," Mr Symond said. "Our economy's in very sound shape except that we are very small globally and the chances of us copping a knock is more likely than not because we are surrounded by big economies on the brink."

He said the sharemarket was "inflated" but property "is surprisingly healthy".

He added that nationally "the steam is coming out. There are still pockets of Sydney that I guess will always be more active.

"The eastern suburbs are always desirable, for example.

"Residential property will hold its own, but there won't be any quick killings. You need to be careful where you buy."

But he added that when it came, the sharemarket shakeout would help prices.

© 1999 Sun Herald

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