Following the new two-day monetary policy meeting format, the RBA announced today that the official cash rate remains at 4.35%.
The Central Bank of Australia said today that ‘recent information suggests that inflation continues to moderate, in line with the RBA’s latest forecasts.
‘The headline monthly CPI indicator was steady at 3.4 per cent over the year to January, with momentum easing over recent months, driven by moderating goods inflation.’
However, the RBA offered a note of caution, adding that ‘while recent data indicate that inflation is easing, it remains high.
‘The Board expects that it will be some time yet before inflation is sustainably in the target range.’
The Central Bank estimated that inflation will ‘return to the target range of 2–3 per cent in 2025, and to the midpoint in 2026.’
The unsurprising pause today comes amidst a backdrop of moderated inflation figures, which currently sit at 4.1%. This is a significant decrease from December 2022 when inflation had burst through the 8% mark. The present downward trend is fueling speculation of a potential rate cut later this year, possibly by August or September.
Experts such as Diana Mousina, AMP’s deputy chief economist, predict the possibility of three rate cuts in 2024. However, according to reports, one in four market experts believe that the RBA won’t start cutting rates until 2025.
Who knows when? But supporting the calls for rate cuts sooner rather than later are economic indicators. Unemployment is projected to rise to approximately 4.5% this year, up from 3.9% late last year. Additionally, recent GDP growth data indicates continued weakness in Australia’s economic performance.
And worryingly, delinquency rates (when the borrower doesn’t make their payment within 30 days of the due date) on home loans are also a point of concern, with banking institutions like NAB reporting significant losses from mortgage arrears in late 2023.
However, amidst these economic challenges, there are signs of resilience in the housing market.
Australian home values are experiencing modest increases, propelled by the anticipation of interest rate drops. This surge in buyer activity is contributing to, in some cases, an increase in home values across Australia.
It’s also worth noting also that fixed-rate home loans became more competitive last month, with 29 lenders reducing at least one of their fixed rates. On the flip side, four lenders increased fixed rates.
For variable-rate home loans, 13 lenders offered lower rates while 19 lenders actually increased their variable rates.
If you would like to review your mortgage rate, contact Mortgage Broker Melbourne. We are one of the most positively reviewed mortgage brokers in Melbourne.
Additionally, we can offer you tips on how to uncover lower rates, boost your savings, consolidate other debts and take the pressure off increases in household costs.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!