As we move into the final quarter of 2024, interest rates remain a hot topic. This month, we explore key shifts in fixed rates and the likelihood of variable rate cuts off the back of last week’s employment data. We also take a look at the movements in our housing market after hearing Corelogic’s Tim Lawless, present to us live last week. We look at the last 12 months, the slowing pace of growth, and explore the increased diversity in house prices across the country.

The Labor Government’s long awaited "Help to Buy" scheme, aimed at helping first-time buyers enter the property market, has been postponed once more in the Senate. The Liberal Party and the Greens oppose the scheme, arguing that it won't solve the housing crisis. If you’ve been fortunate enough to buy property already, perhaps using one of the existing first home buyer schemes, it’s potentially time to consider fixing a portion of your debt. We touched on it last month, that we could see the US drop their interest rates, and they did this week. We also touched on fixed rates last month and this week we saw some super low principal and interest, 1 and 2 year fixed rates become available. With the Reserve Bank of Australia (RBA) expected to keep the cash rate steady at 4.35 per cent in their upcoming meeting, these lower fixed rates are starting to look attractive.

It’s not just the weather that is heating up – the mortgage market is too. Our big banks like CBA, Westpac, Macquarie and NAB have started cutting their fixed rates. CBA and Westpac have gone one step further and reduced rates on some variable loans. This is good news for us borrowers, and a step in right direction. The US Federal Reserve Chairman, Jerome Powell, in his most recent speech over the weekend said, “the time has come for policy to adjust”, meaning official rates are about to be cut, over in the US. Despite how volatile and challenging the current economic landscape is, this speech has triggered markets around the world to feel a degree of optimism, which is also having an impact on us here in Australia.

This Wednesday, July 31st, the Australian Bureau of Statistics (ABS) will release the inflation data for the June quarter. A 1.1 per cent increase or more, will mean inflation is still too high. This will average out to over 4 per cent a year, above the Reserve Bank of Australia's (RBA) targeted range of 2 to 3 per cent. Rate hikes in August, as a result, could be expected when the RBA next meets. Some economists believe the RBA should have already raised rates further, due to persistent inflation. A rate increase could negate recent budget-delivered cost-of-living relief, and tax cut benefits. It could also hurt borrowing capacities, and dampen consumer and business sentiment. Lately, we've been asked, 'When will rate increases stop?' and 'Should we fix our loans now?' All of these questions and more, we explore, in this month’s Black & White Finance update.

The Reserve Bank of Australia (RBA) Governor Michelle Bullock delivered the fourth press conference of the year last week, deciding to once again hold the cash rate steady at 4.35 per cent. The RBA made clear they are only considering holding or rate hiking at the moment. Despite this high rate environment and increases in business insolvencies, property prices continue to increase off the back of extremely low supply. Forecasts for rate cuts are now pushed out, and broadly agreed to happen at the end of the year, or in early 2025. Government spending from the federal and state budgets, about to filter through to the economy and our property market in particular, further cement this view of rates being on hold for longer. One economist believes we are likely to see a rate increase in August this year and he’s one that is regarded as the best in the industry – not what us borrowers want to hear.

Know someone struggling to get their loan across the line because of servicing? Well, in July this year, we will see our tax cuts come into play, which means we all get to keep more of our income, and it also means we can borrow more. We’ve already seen some of our lenders start to update their servicing calculators and we can see the positive difference this tax rate change is making. Meanwhile, the stimulus measures in the 2024-2025 Federal Budget to support our economy, didn’t do much to change the views of economists, who predict rate cuts at the end of this year. The budget put forward a set of forecasts on unemployment, wages, and our population growth, which suggests that our economy is likely to cool despite there being near-term risks. If these projections unfold, interest rate cuts should start at the end of the year as predicted.

We're now even more likely to see interest rates stay steady, for longer. Again, we’ve seen higher than expected US inflation numbers, so the fear amongst some is that the same is likely to occur here in Australia. If we combine our data sets such as unemployment, wages, and rents, you can see that we’re just not cooling fast enough for rates to come down soon. Economists are suggesting we will see rates come down, at the end of the year so we're generally advising to stick with variable rates for now. If you can afford these high repayments, or have equity in your existing property, the setting is somewhat positive from an investor's perspective given high population growth and high rents.

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.

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 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!

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.

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.

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.

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.

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.

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?

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. 

Scam alert: Unfortunately, it’s been brought to our attention, that scammers are out there, cold-calling people and trying to impersonate us.

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.

Our January 2023 Black & White Finance update is here to help you stay on top of all things property and finance related - with no grey areas. This month we cover imminent rate rises, how long these high rates will last and when they will drop.