RBA expected to hold steady for longer

RBA expected to hold steady for longer

If the data out of the US economy this week is anything to go by, our Reserve Bank of Australia (RBA) will likely hold the cash rate steady when they meet next week. Labour market shortages, and our population growth fuelling the rental crisis, are factors keeping consumer prices high. It’s not looking likely that we will see rate cuts mid-year as some experts or money markets predict. When you then add the construction of property and supply shortages, you have further inflationary pressures so the RBA will want to wait a little longer before considering to cut rates. If you have business debt or a home loan, dealing with the higher interest rates from the banks is going to last for a while. On the positive side, if you own property, these conditions may produce price growth for you this year, and we already see this in the data.

Rates down by year end, even mid-year

Rates down by year end, even mid-year

Michelle Bullock, our new Reserve Bank of Australia (RBA) Governor made clear that the economic landscape is uncertain, suggesting that further rate hikes may be required in 2024. Not what mortgage holders want to hear. The RBA emphasised that they will be carefully considering the data before they make interest rate moves this year. Leading economists suggest that while no one is expecting a rate hike, it’s possible. The broad consensus amongst the experts is that rates will remain where they are for a while, with cuts expected towards the end of the year with some expecting them as early as mid year. Some banks have already started to cut rates which is welcoming news to borrowers.

What's to come in 2024

What's to come in 2024

What’s to be expected from the lenders, the Reserve Bank of Australia (RBA), and us as your mortgage brokerage, in 2024, is what we uncover in our last Black and White Finance update for the year. We look at interest rate forecasts, explore what product and policy-related changes we can expect from the banks, and lastly, our commitment as a business to you. Hopefully, you can put your feet up and enjoy quality time with your loved ones this festive season before it all starts again!

One RBA hike to go but banks have different plans

One RBA hike to go but banks have different plans

Most economists from all the big banks share the same sentiment – one more interest rate rise to go and then we’re done! While there are risks still apparent, this is the shared view, given the fact that Australian wages and jobs figures released during the week, were roughly in line with expectations of the Reserve Bank of Australia (RBA). Even if this is true, and we don’t see a rate rise in December, but a final rate rise in 2024, there’s another risk for us existing or future borrowers. The banks may all need to lift interest rates anyway, beyond the RBA’s potential increase. The price war amongst all the lenders has eroded margins and eaten into profitability and now they need to claw some of this back – is the narrative from the big banks.

Borrowers feeling the pinch and expert predictions

Borrowers feeling the pinch and expert predictions

It’s been a week we won’t forget in multicultural Australia, with our focus turned to our decision on the Voice while at the same time coming to terms with the atrocities out of Israel. To add to our somewhat somber mood are the opinions of economists and leading industry experts suggesting that interest rates could increase again, adding to our cost of living pressures. On a more positive note, these economists are now saying that if there is another rate rise, it’s likely to be the last before rates drop next year, and they are now putting dates on these rate cuts, which the data looks to support. So the hard times, at least from an interest rate perspective, won’t last forever. We go into this and more in this month's update.

New RBA boss, rates holding and bank leniency

New RBA boss, rates holding and bank leniency

Reserve Bank of Australia (RBA) Governor, Philip Lowe, left rates on hold as was widely expected last week. His “Some closing remarks” speech, delivered a few days later, has been well received by most people, and his shared insights after 43 years at the RBA, we’ve summarised for you. The new RBA Governor, Michelle Bullock, has a tough job ahead and the volatile landscape will be tricky to navigate. Adding to the volatility that the RBA is working with, is the price of oil dilemma we’re now facing again, pouring further fuel on the inflation challenge. Being at the peak of the fixed rate cliff with many borrowers now on higher interest rates, we are starting to see our savings diminish and spending slow. While rates are high, it’s encouraging though, to see the banks make it easier for home loan borrowers and small businesses looking to access finance which we also go into more detail in this month’s update.

RBA should hold on rate rises

RBA should hold on rate rises

Off the back of softer spending data, and because the Reserve Bank of Australia (RBA) kept the cash rate steady this August, there are many economists who suggest that the RBA is done with raising interest rates. On the other hand, there are economists who believe we’re at a critical moment in the economic cycle, and that there are just too many risk factors at play to be confidently saying that the RBA is done with raising rates. These more conservative economists believe we could push towards or even past a cash rate of 4.6 per cent which would mean a few more rate rises – not what we want to hear. We look at this in more detail with a few graphs, and what our borrowers could expect, in this month’s update.

Banks easing, as rates, property & wages rise

Banks easing, as rates, property & wages rise

The federal government's recent rise to the national minimum wage, along with stronger than expected monthly inflation figures for April, has led economists & money market traders to believe we will most certainly see more rate rises this year. The banks, who are now cutting back on their refinance cash back offers, will pass on rate rises if they eventuate but on a more positive note, they are also now more lenient with servicing requirements if you’re looking to refinance. With the fixed rate cliff in full swing, it’s more important now than ever, to know which bank is loosening up policies to help people in need. If you’re purchasing though, the same old 3 per cent servicing buffers apply and if you’re a first home buyer, there’s the NSW Labor government changes to stamp duty to be aware of.

Are we ready for higher property prices?

Are we ready for higher property prices?

Inflation is sticking around for a little longer but it has now peaked, which is good news. When the Reserve Bank of Australia (RBA) meets on Tuesday this week, we’re hopefully going to hear of another rate pause. With rate rises slowing or pausing, low housing supply, higher residential rents, and population growth, it all points to higher property prices. Will the NSW Labor Governments election promise for first home owners further fuel property prices? And what does the RBA’s review look like for us going forward?

Rate cuts, potentially this year

Rate cuts, potentially this year

Senior economists from NAB, Macquarie and ANZ suggest the cash rate will peak at 4.1 per cent before rates fall. Even with cost of living pressures mounting, spending seems to continue, and oddly enough, our level of savings, on the whole, hasn’t reduced as expected. We still have really low unemployment too, so it’s predicted that next month we’ll see yet another rate rise to cool the economy. Money markets on the other hand, are pricing in rate cuts a little earlier than expected. This week’s retail sales and inflation figures will determine the course of action. 

Is the RBA done with rising rates?

Is the RBA done with rising rates?

Many borrowers are coming off their fixed rates, unemployment is rising, and borrowers are not being able to meet new repayment buffers. There’s no doubt that 9 back-to-back rate rises by the Reserve Bank of Australia (RBA) is causing financial strain for us. The RBA, under heavy scrutiny this week, has suggested that more rate rises may be necessary, but economists believe that the RBA has already done enough & we agree, or hope, this is the case.

NSW stamp duty changes & rates to peak earlier

NSW stamp duty changes & rates to peak earlier

Interest rates are predicted to peak lower and pause earlier than originally expected. A cash rate of around 3.6 per cent is where most expectations are now sitting. Some reputable experts believe we will only get to 3.1 per cent, which means we’ve got one more rate rise to go. Hopefully, for home owners and potential buyers, this ends up being true and for NSW first home buyers, there’s more good news. First home buyers can now opt to pay an annual property tax instead of upfront stamp duty, as the NSW Government legislated the First Home Buyer Choice scheme this week.

The End Of 50 Basis Point Increases

The End Of 50 Basis Point Increases

Was that the last super-sized 50 basis point increase? Some experts believe so and the next few Reserve Bank of Australia (RBA) increases will be by 25 basis points, a normal amount. These rate rises are tough to swallow when life is already expensive. This will mean that we will be able to borrow even less and our property prices will continue to fall. While each bank has passed previous rate increases on in full, they have different rules when it comes to how they apply the increases to their application and approval processes which we should know about.

Is Now The Best Time To Buy?

Is Now The Best Time To Buy?

Interest rates will definitely rise again in the coming months, but there’s more of a case building for this downward cycle in property prices to only last until the middle of next year as rates then go the other way, down. Even though borrowing is already tight and will become more expensive, rising rents and a longer term property focus, just might be providing for some good buying conditions.

On another note, as you may know, we tacked the City2Surf, dedicating our challenge to the Royal Flying Doctor Service. Feel free to help us, help those, who live a little further away, we would love you to support our cause. A huge thanks to those who have contributed to our charitable cause already – we appreciate you.

Inflation and rate increases to end next year?

Inflation and rate increases to end next year?

Exorbitant fuel, grocery, construction costs and now wage pressures, are providing the Reserve Bank of Australia (RBA) with many problems and interest rates will as a result continue to go up. Two big Australian banks say the RBA will raise it’s interest rate significantly higher than previously estimated. It’s likely then that house prices will inevitably continue to come down, but for how long will this cycle last before it reverses again? Will the RBA go too hard in the next 12 months? Will rates come down next year?

First home owner initiatives to combat rate rise impacts

First home owner initiatives to combat rate rise impacts

Home loan variable interest rates are rising on Tuesday next week and fixed rates, which are already sky-high went even higher last week with some of the banks. These interest rate rises alone are impacting how much we can borrow. If this global supply shortage problem normalises sooner than later and these Federal and State government first home owner initiatives are effective, will our residential property market price correction, slow down?