The Reserve Bank of Australia (RBA) has once again decided to keep the official cash rate at 4.10% for September. This decision was widely anticipated, with 97% of economists and all four major banks predicting a pause. What does this mean for the mortgage landscape, and more importantly, how does this affect you?
Breaking Down the RBA’s Decision
In his farewell address, outgoing RBA governor Philip Lowe revealed that although inflation has seen a downward trend from its December peak of 7.8%, it’s still too high. With Michele Bullock set to take the reins on September 17, Lowe emphasized the importance of maintaining interest rates at their current levels to help balance supply and demand in the economy.
This announcement is especially significant given that a Canstar study found almost half of Australians are not confident in the RBA and government’s ability to control inflation.
How Does This Affect the Mortgage Market?
Peter James, founder of Mortgage Ezy, praised the RBA’s decision as the “right move.” He stated that the consecutive rate hikes since May 2022 have been a tough pill to swallow for existing borrowers and a hurdle for potential buyers. Borrowers with a 30-year $1 million fixed rate loan have seen an estimated monthly payment increase of $2,435 since May 2022.
Bradley Donnelly, a finance broker at Green Finance Group, also lauded the decision, noting that interest rate stability helps customers “plan for the future.”
Products to Consider in a Stable Market
In times like these, brokers and borrowers alike are looking for stability. Donnelly stated that variable rates seem to be the favorable product among clients. James mentioned that non-banks are making a necessary transition from prime loans to specialty loans, filling gaps left by traditional lenders.
Is the Cash Rate Story Over?
Both Westpac, Commonwealth Bank (CBA), and ANZ forecast that rate hikes have come to an end. However, NAB speculates a peak of 4.35% by November. The debate continues, and trying to predict the cash rate, as James puts it, is like “peering through a foggy crystal ball.”
Why Choose Archer Mortgage Group?
In these uncertain times, making the right mortgage decisions is crucial. That’s where Archer Mortgage Group comes into play. As experts in the Australian mortgage landscape, we offer customized solutions tailored to your unique needs.
Don’t navigate these choppy financial waters alone. Reach out to Archer Mortgage Group today for a consultation and secure your financial future.
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