A majority of Australians believe the Reserve Bank will cut official interest rates before the year is out, according to new survey.
Loan Market asked, 'What do you think the RBA will do with interest rates for the remainder of 2011?' Of the 654 respondents, 56 per cent thought the cash rate would be lowered with 34 per cent expecting one rate cut and 22 per cent expecting two.
The survey also revealed 28 per cent think rates would be left unchanged and 16 per cent believe the RBA will hike rates.
"Australians are a lot more relaxed and comfortable about where interest rates are heading than they were a few months ago," Rushton says.
"The RBA, until as recently as last month, had considered lifting the cash rate to counter any rise in inflation but a number of factors such as the uncertainty in the global economy and sluggish domestic consumer sentiment has seen that change.
"The debt crisis in Europe and the soft retail sector in Australia could see the RBA reduce rates as early as its next board meeting on Tuesday."
For people aged 40 years old or older, 30 per cent thought there would be two rate cuts before the end of the year. Among Generation-Y respondents, 30 per cent expect one cut and another 30 per cent expect a rate hike.
"Gen Y makes up the majority of the first homebuyer consumer profile and the RBA taking rates up four times last year and continually raising the possibility of rate hikes this year certainly dampened their confidence," says Rushton.
"We are starting to see more first-time buyers coming back to the market and an interest rate cut would help to boost activity."