Spokesperson from the Reserve Bank of Australia Philip Lowe announced the Cash Rate for June 2023 has risen to 4.10%. Following each rate rise in Australia, homeowners across the Nation prepare to experience another increase in the cost of living. Among mortgage repayments, all those who have liabilities with variable rates feel the pinch as their lenders and banks adjust their products accordingly.
Mentioned in previous announcements, the RBA aims to reach a level of inflation to balance out our economy furthermore. The desired level of inflation will allow for nationwide employment rates to increase, and for the cost of infrastructure materials to settle, given that supply and demand is increasing after the global pandemic
In a bid to make cash flow manageable within the household, mortgage holders and those with active home loans are turning to their brokers to sift out the most competitive refinance opportunities. It pays to have someone on your side to do the research- sometimes having the lowest rate doesn’t necessarily mean the lowest repayment. Establishment and maintenance fees can create for higher interim repayments; meaning it’s best to widen your scope when aiming to manage expenses in the day to day.
It’s no secret that we are to expect a long string of rate rises to come before the RBA deems inflation to be within their target range. Senior Lecturer at UQ Business School, Dr Lin Mi says she expects interest rates to stabilise towards the end of 2024. This would be a reasonable time frame for interest rates to drop in the US and Europe, given that their inflation is also at an all-time high.
The RBA recognises that the current rates are not sustainable, and if they were maintained for an extended period of time; the economy would enter into a ‘toxic state’ says Dr Mi in her research article. The property market is expected to reflect rate changes around six months after the cash rate is lowered, meaning we should see prices dropping mid 2025 if all predictions are correct.