December 05, 2023
At today’s December monetary policy meeting, the Reserve Bank of Australia (RBA) held the nation’s official cash rate steady at 4.35%.
Speaking about the decision, Mortgage Choice CEO, Anthony Waldron, commented, “Australians will be relieved at the Reserve Bank’s call to leave the cash rate unchanged at its final monetary policy meeting for 2023. Hopefully this gives households some much-needed breathing room before the expensive holiday season.”
The latest data from the Australian Bureau of Statistics showed that while CPI inflation rose 4.9% in the 12 months to October 2023, this is down from 5.6% in September and below the peak of 8.4% in December 2022.
“Despite the easing in inflationary pressure, the RBA Board was clear in the minutes of its November meeting that further rate rises are not off the cards,” said Waldron. “By the next monetary policy meeting in February 2024, the RBA will have the December quarter CPI data to assess, so I'd be hesitant to breathe a sigh of relief just yet.”
Mortgage Choice home loan submission data showed a 3% uplift in purchase activity during November, as borrowers make moves on their new year home ownership plans in the last month of the spring selling season. The data also revealed a 4% drop off in the proportion of refinances in November. The same data showed that 97% of loans submitted by Mortgage Choice brokers were for variable rate home loan products, and only 3% of loans had a fixed component.
Home prices have proved resilient to the impact of higher interest rates this year, and the PropTrack Home Price Index revealed that trend continued in November. National home prices climbed 0.22% in November to hit a new record high, bringing them up 5.33% so far this year, although the pace of growth slowed as more properties came to market. Senior PropTrack Economist Eleanor Creagh said, “The decision by the Reserve Bank to hold the cash rate steady in December will maintain both buyer and seller confidence. Looking ahead, interest rates are either at, or very close to, their peak. The outlook for the economy is weaker, however, population growth is set to remain strong. Together with a shortage of new home builds and challenging conditions in the rental market, prices are expected to continue rising, though the pace of growth will continue to slow.”
Mr Waldron commented, “As 2023 comes to a close, I’d encourage borrowers to review their home loan to ensure its still competitive. And, if you’re planning to buy your first home or upgrade in 2024, this is a great time to set the wheels in motion for your home loan application. Your broker can help you understand your borrowing power and the home loan options available to you.”