We are a proud member of the Financial Services Online network!
Connect with us on your favourite social media platform for the latest financial news, views, tips, tricks, resources and information.
Since commencing the tightening cycle on 5 May 2022, the cash rate has risen by 175 basis points; but despite the rapid hike, the cash rate remains well below the pre-COVID decade average of 2.56%.
The RBA is clearly prioritising fighting inflation over supporting the housing sector and any temporary slowdowns in overall economic activity, as the cash rate approaches a contractionary setting later this year.
If house prices fall and mortgage repayments rise, it might help to limit inflation through wealth effects and may also reduce household spending.
The Reserve Bank of Australia believes that inflation will be back at 2-3% by the end of the year and the cash rate may retreat somewhat through the second half of next year.
The cash rate is forecast to peak at 3.32% in March next year and fall back to 2.99% by the end of 2023.
Today’s rate hike, which is likely to flow through in its entirety to variable mortgage rates within a matter of days, paints a weaker picture for the housing sector.
Higher interest rates have already had an immediate downside impact on housing values, with CoreLogic’s combined capital cities index peaking shortly after the first-rate on hike in May.
Since that time, dwelling values across the combined capital cities index are down -2.8% to 1 August, after rising 25.5% through the recent upswing.
According to most bank forecasts, the cash rate could rise at least another 75 basis points before peaking.
With this in mind, the decline in housing values is expected to become steeper and geographically more widespread.
Sydney home values are already falling at the fastest pace since at least the early 1980s, with most of that decline (4.8%) occurring since May’s cash rate increase.
Home prices will be influenced by how quickly interest rates rise and how high they go, as well as the performance of the broader economy, available employment opportunities and demographic trends.
As the cash rate finds a ceiling, housing values should find a floor.
Published:Wednesday, 3rd Aug 2022
Source:
|
| Interest rates up another 50 basis points with more hikes to come 03 Aug 2022: . As expected, the Reserve Bank of Australia (RBA) raised interest rates by another 50 basis points this month. The fourth rate hike in as many months, today’s decision takes the cash rate from an emergency low of 0.1% to 1.85%. - read more |
| Business loans on the rise while mortgage growth remains flat 02 Jun 2022: . Australian business loans growth accelerated in April as mortgage growth stayed consistent, with major banks growing at less than the system average according to latest RBA data. - read more |
| Homebuyers up in the air despite new government home loan support 29 May 2022: . The government’s promise of an equity contribution will help the most disadvantaged Australians to get a home loan, but they still won't be able to afford one. - read more |
If you are seeking lower rates, lower fees and more flexibility in your home loan. you are in luck! Our national panel of mortgage brokers is looking forward to an opportunity to assist you. Apply online for a free eligibility assessment and one of our broker network refinance specialists will get on the case to track down the best deal for your individual circumstances. Without any obligation and at no charge to you.
| The Truth Behind Payday Loans There’s a lot been said about payday loans. Many claim that the interest rates charged are outrageous. Others say that they are the only source of finance available for those with less than perfect credit score. There is a bit of truth in both claims but there is much more to payday loans than meets the eyes. - read more
|
| When should I use a personal loan? Unsecured personal loans can really help in a pinch. If your savings are low and your car breaks down, for example, such a loan can patch up your life. Or maybe you're buying a big-ticket item and you need backup money to cover a short-term hole in your bank account. - read more
|
| Personal Loans And The Consumer Credit Code Understanding your rights as a consumer is essential in dealing with complex issues like personal loans and other finance. Here we reveal, in simple terms, how the Credit Code works for you. - read more
|
| How to Buy a House with Bad Credit Most people would expect that a bad credit rating would make it impossible to get a mortgage to buy a home - but it's not as simple as that. Can you buy a house with bad credit? The short answer is YES, but it is not all that easy. - read more
|
| Car Sales: 3 Important Steps Before Buying Your Next Vehicle If you’re thinking about buying a car, there are a few things you should do before you head to the dealership. The most important thing is to establish a budget and figure out what you can afford. Once you have a firm understanding of your financial situation, you can start looking for a car that fits your needs, lifestyle and budget. - read more
|
| Car Leasing Leasing is an often misunderstood car financing option so, in response to subscriber feedback, we've included this article to help give you a better understanding of what it is and how it works. - read more
|