From George Tharenou at UBS:
…a broadening range of weaker data raises the risk of RBA rate cut. The continued fall in home loans suggests that credit tightening is still playing out, ahead of the Royal Commission final report (due Feb 1) & the next three game changers of Debt-To-Income limits, & potentially negative gearing & CGT. Our long held forecast peak-to-trough drop in loans was 20%, but our risk case of -30% seems increasingly likely; seeing housing credit growth slow towards flat by 2020, & house prices to drop by 10%+. Given this, compounded by the recently weaker data across residential and non-residential commencements, and consumer sentiment, we think the risk of a rate cut from the RBA has increased.
Spot on. Good to see the commentators finally catching on.
