Aussie homeowners likely to be spared rate increase amid lower inflation
In the latest Finder RBA Cash Rate Survey, 82% of the 38 experts surveyed predicted the cash rate will remain at 4.35% in December, offering relief to mortgage holders after lower-than-expected inflation figures.
Graham Cooke (pictured above left), head of consumer research at Finder, said a cash rate hold is welcome news for financially strained homeowners.
“The RBA was threatening to pull the presents from under the Christmas tree for many homeowners, but falling inflation means they can breathe a quiet sigh of relief,” Cooke said. “Inflation is the one number the RBA is most heavily influenced by, so this downward trend is great to see.
“Aussies with a home loan can now look forward to two months of certainty, as the RBA does not make a decision in January – and can only make eight cash rate changes next year.”
Anthony Waldron (pictured above centre), of Mortgage Choice, is also expecting a cash rate hold on RBA’s last monetary policy meeting for 2023.
“The Australian Bureau of Statistics’ monthly CPI indicator rose 4.9% in the 12 months to October, down from the previous month and well below the peak of 8.4% in December 2022,” Waldron said. “Hopefully this gives households some much-needed breathing room.”
Evgenia Dechter from UNSW, and Harry Murphy Cruise, of Moody’s Analytics, also agreed that falling inflation pointed to a hold this month.
“The lower-than-expected October print is an early Christmas present for households and businesses. Combined with the monthly fall in retail sales through October, it is clear that higher interest rates are quelling demand and—by extension—inflation,” Murphy said. “That should be enough to save the Reserve Bank board from having to be the Grinch of Christmas when it meets next week.”
“Other domestic and global indicators also project a slowdown in the Australian economy,” Dechter said. “However, immigration inflow remains high, creating an upward pressure on prices in the short run.”
In November, 37% of Australian homeowners reported difficulties in meeting their mortgage payments, according to Finder’s Consumer Sentiment Tracker.
Another expert expecting a hold decision, Tim Reardon (pictured above right), of the Housing Industry Association, said he is expecting the adverse impact of the rate increases “to flow through to fewer homes under construction which will ease the labour shortage and stop obscuring the impact of rate rises to date.”
Majority convinced cash rate has peaked
According to 54% of experts, the cash rate has likely peaked at 4.35%. Nearly half (46%), however, anticipated another rate hike in the future.
Cooke said that even with the projected rate hold in December, homeowners are not entirely in the clear.
“If inflation doesn’t continue to ease, we are looking at another rate rise early next year,” he said.
Fewer first-home buyers in 2024
A slim majority (54%) of experts believed the number of first-home buyer loans will decline in 2024.
The sentiment aligned with 36% of Australians expressing doubt about affording their own homes, according to Finder’s Consumer Sentiment Tracker. A further 18% expressed disinterest in homeownership.
These figures marked a notable increase from 2022, where 33% doubted their ability to afford a home, and only 13% lacked interest in homeownership.
Christmas on credit
Experts predicted that 58% of Australians will put more Christmas spending on credit cards this year, raising concerns about a potential debt hangover for many Australians entering the new year.
The average spending is estimated at $1,479, with 11% relying on credit cards and 7% on BNPL services, Finder data showed.
Finder's analysis of Reserve Bank data revealed that the value of credit card purchases surged to a record-breaking $34.7 billion in September.
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