We’ve well and truly tipped over into the second half of the year, or the first half of the financial year and both scenarios are important for different reasons. While everyone is concerned with cash rate news and obvious implications on the home loan interest rates, please keep in mind that there is always things your mortgage broker can suggest to make sure your home loan is right for you at this time.
If you’re self employed it’s the beginning of another year, you may have your last years tax returns completed and could be in a great position to borrow. Perhaps this is the year you chase down some new targets and look at scaling. We are able to help with both getting you a home loan and looking at any commercial finance you may need in order to achieve your business goals.
For those who are salary based, you’re obviously keenly watching the interest rate developments as currently a lot of overall income is going towards those mortgage repayments.
Let’s look at what the current cash rate situation is and consider what the markets are doing, in order to give you all the best mortgage broker advice and information for Perth and beyond.
RBA holds cash rate at August meeting
In a move widely anticipated by the markets, the Reserve Bank of Australia (RBA) has decided to hold the official cash rate steady at 4.35% during its August Board meeting.
In what is also by now a well known rationale for the interest rate decision, inflation is an ongoing issue. However, there is some positive data to suggest that inflation is heading in the right direction.
When will the interest rate start to come down?
Governor of the RBA, Michele Bullock, gave some further insights behind the decision to hold the cash rate.
“The mandate of the Reserve Bank Board is to contribute to the economic prosperity and welfare of the Australian people by delivering price stability and full employment. In practice, this means setting monetary policy to keep inflation between 2 and 3 per cent and employment at the maximum level that is consistent with maintaining low and stable inflation,” said Bullock.
Striking a balance between inflation and unemployment was the desired outcome of holding the cash rate, said Bullock.
“That sounds straightforward. But it is quite complex. It involves the Board assessing current economic conditions, forecasting how the economy is likely to evolve over the coming year or so, considering the risks and trade-offs and then deciding what level of interest rates is required to deliver an inflation rate of between 2 and 3 per cent, while at the same time keeping the unemployment rate as low as possible. The experience since the pandemic has demonstrated just how complex this can be,” she said
Considering the current cash rate of 4.35 per cent is at a 12-year high, many are displeased at the decision to remain steady. However, there hasn’t been a rise since April 2022, where it climbed 0.1 per cent.
“Australia too has seen a sharp rise in interest rates. The cash rate has risen from 0.1 per cent in April 2022 to 4.35 per cent today. The most obvious area where this has had an impact is on the interest rates paid by households with mortgages. It has increased their payments, which in turn has reduced the amount of spare cash they have to spend on other goods and services,” Bullock said.
Noting that inflation is “still too high,” the RBA is reportedly working to reduce the impact on Aussie consumers. Despite this, the process is “proving very sticky”, said Bullock, and the board doesn’t expect inflation to be back to 2–3 per cent until the end of 2025. You can read her full statement here.
In a nutshell, Ms Bullock has said that we are unlikely to see any rate cuts until inflation is back within range, and that is not anticipated until late 2025.
There is also an argument that cutting rates too soon could see inflation spike right back up, and then we’re back where we started. While some may argue that the RBA should have more tools in their kit to curb inflation other than having the brunt of the problem shouldered by mortgage holders, at the moment they really don’t.
Fortunately, there are still things your mortgage broker can do to help reduce your repayments and/or consolidate your debt so it’s not a case of just waiting for the RBA to provide some relief, talk to us today to see what we can do for you.
What’s happening with the Perth market?
Despite a perceived shortage of homes for sale, Perth’s property market saw 54,307 preliminary settled sales of houses, units, and land for the year, REIWA reported.
“People are still selling, but homes are being snapped up in record timeframes, so the number of properties advertised at any time appears low,” REIWA CEO Cath Hart said.
Perth’s rental market also saw records in 2023-24. The median weekly rent prices for houses and units reached $650 and $600, respectively.
Despite stable prices since March, rental listings have increased, and properties are taking longer to lease.
“The number of rental listings has been increasing since February and properties are taking longer to lease, particularly at the higher end of the market,” Hart said.
If you want a quick idea of what interest rate we can secure for you, visit our rate check page, or alternatively call us now for a quick chat over the phone.
All lending subject to status and lenders criteria. Terms & conditions apply. This document contains general information only. Your own personal circumstances have not been considered and you should seek independent financial advice prior to making any decision on a financial product.
