Experts from PropTrack, Janus Henderson, and Aussie Home Loans share their thoughts
The Reserve Bank of Australia (RBA) maintained its official interest rate at 4.35% during its August monetary policy meeting, a move that has prompted industry professionals to offer insights and financial advice to Australian households.
Cameron Kusher (pictured above, far left), director of economic research at PropTrack, noted that the decision to hold rates steady came amid expectations of a potential increase. He attributed the unchanged rate to June quarter inflation data, which aligned with forecasts, temporarily easing inflation concerns.
“The rate of growth in home prices has consistently slowed over the past five months, and we continue to see the lowest number of annual dwelling approvals in more than a decade,” Kusher said. “Despite slowing price growth, more properties are being listed for sale, and sales volumes remain robust. Stable interest rates are likely to support vendor and purchaser confidence as we head into the busier spring period.”
Kusher also highlighted the tight labour market, with strong job creation and low unemployment contributing to ongoing demand for credit and housing finance. However, he cautioned that inflation remains too high and could prompt future rate increases if it does not ease.
“Following the publication of June’s inflation data, the expected timing of a cut has shifted forward to March 2025, noting there is no RBA board meeting next March,” he said. “Economic data from the US published last week showed a significant weakening of the labour market and heightening expectations of an economic slowdown in the US. This could reduce the likelihood of further interest rate rises here and potentially result in rates being cut sooner.”
Emma Lawson (pictured above, second from left), fixed interest strategist at Janus Henderson, echoed the sentiment of a potential rate cut, but offered a more cautious timeline.
“We price a more modest than the historically average easing cycle, of around 175 basis points, spread over an extended period,” she said. “There remain a myriad of risks to the base case, with the high case of a late cycle hike in H2 2024, and a slow cycle easing through to 2026. Post the inflation data, and given the rise in global slowing, this risk has eased back of late.
“We hold an alternate case of a modestly earlier commencement, which finishes with slightly more easing over the whole cycle. This is equally possible as the high case, under the current environment.
“The market has built in an RBA easing cycle, with around 100 basis points priced over two years. This is a start, but we believe that there is more to come, as the RBA allows policy to become accommodative over the cycle.”
Amid the current economic conditions, mortgage brokers Scott Adams (pictured above, second from right) and Sam Fowler (pictured above, far right) emphasised the financial challenges facing Australian households despite the interest rates hold.
Pointing out that accepting the current home loan situation without exploring options could lead to unnecessary costs in the short and long term, the brokers from Aussie Home Loans provided several tips they are currently using with their clients to put $90,000 back in their pockets.
Among these were debt consolidation, topping up home loans to create a financial safety net, and regularly checking interest rates to avoid overpaying.
“Consolidating personal debts into a home loan can significantly improve cash flow for many Australians,” Adams said. “I recently helped a client reduce their overall repayments by over $1,000 per month through debt consolidation, providing immediate relief and long-term savings.”
Fowler advised homeowners to explore topping up their home loans, which could provide access to additional funds as property values rise. He also encouraged borrowers to check their interest rates and consider refinancing to secure better deals.
“Loyalty can cost you,” Fowler said. “By checking your interest rate, you could potentially save thousands of dollars over the life of your loan.”
Fowler and Adams stressed the importance of working closely with mortgage brokers to identify savings opportunities and make informed financial decisions, adding that consistent planning and open communication with brokers are key to achieving the best outcomes for homeowners.
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