More rate relief

Published in the Geelong Advertiser, November 2008 by Rebecca Tucker

Christmas could come early for Geelong homeowners when the Reserve Bank meets next week, with tips it will further cut interest rates.

Wealth Within chief analyst and Geelong Advertiser columnist Dale Gilham yesterday said it was almost a certainty rates would again fall.

"I don't even think it's a question in my mind that they will put the rates down again, because they've obviously seen the economic situation around the world and want to minimise the impact on Australia," Mr Gilham said.

Interest rates reached a five-year low last month when the RBA slashed the official cash rate by 75 basis points, dropping it to 5.25 per cent. The four major banks charge about 7.7 per cent on a standard variable home loan.

Mr Gilham said he failed to see where the so-called cash crisis was in Victoria, after spending several hours last week shopping in a major centre unable to reach a cash register due to the crowds.

"People don't seem to be worried about where they're spending their money," he said.

He said the clear worry was with investors and retirees dependent on super funds.

Mr Gilham expected the next 12 months to bring lower returns for the market, but said that was not abnormal, with a downturn necessary after several years of exceptionally good growth.

But he said people would always be better off in the share market than putting their money in the bank.

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