Could rates ease again next year?

The Australian Business Economists survey has found that most economists believe that interest rates could start falling again by the end of 2004 as the recovery slows. The economists expect economic growth to reach 3.9 per cent next year before easing off to 3 per cent in 2005.

Most ABE respondents believe interest rates will rise again in December and by June next year mortgage rates will be at 7.33 per cent, adding $68 a month to a $200,000 home loan. But rates will either fall again or remain steady towards the end of 2004, they believe.

The poll also found that economists believe house prices will either remain stable or fall by less than 10 per cent over the next two years. The economists consider that one of the biggest threats to the economic outlook is high household debt.