October 03, 2023
At its October monetary policy meeting, the Reserve Bank of Australia (RBA) held the nation’s official cash rate steady at 4.10%.
Speaking about the decision, Mortgage Choice CEO Anthony Waldron commented, “Today’s cash rate call marks Michele Bullock’s first monetary policy meeting as Governor of the RBA. I expect borrowers and hopeful buyers alike will be pleased about this decision, which gives Australians some breathing room.”
The latest Consumer Price Index (CPI) indicator from the Australian Bureau of Statistics (ABS) made the case for the RBA’s decision to keep the cash rate on hold. Despite an uptick of 5.2% in the 12 months to August 2023, annual inflation remains below the peak of 8.4% seen in December 2022, and underlying inflation in August was lower than in July 2023. The ABS also reported that the unemployment rate remained steady in August.
Mortgage Choice home loan submission data showed that 98% of loans submitted by its brokers in September were for variable rate home loan products, and only 2% of loans had a fixed component. The data also showed a 7% increase in purchases and a 6% drop in refinancing activity during September.
Mr Waldron said, “The largest proportion of loans coming off a fixed term occurred earlier this year, and with interest rates holding steady for several months, our submission data is showing a slowdown in refinancing activity. The data also reflects the busy Spring selling season, which is resulting in more properties coming to market and giving more buyers opportunity to buy.”
The PropTrack Home Price Index revealed that national home prices moved higher in September. National prices have now entirely recovered 2022’s falls after climbing 0.35% month-on-month to peak levels. Prices are up 4.31% so far this year. All capitals, except Darwin, saw prices rise in September.
Senior Economist from PropTrack Eleanor Creagh said, “After increasing interest rates 400 basis points since May 2022, the Reserve Bank held the cash rate steady at 4.10% today, maintaining the pause on its rate hiking cycle. Subsiding momentum in economic activity, underlying inflation and consumer spending have eased pressure on the RBA to continue lifting interest rates.
“The decision by the Reserve Bank to continue holding the cash rate steady in October will underpin buyer and seller confidence for the Spring selling season. Looking ahead, interest rates have very likely peaked and population growth is rebounding strongly. Together with a shortage of new home builds, prices are expected to rise, and more markets will likely reach new record levels after recouping last year’s fast falls.”
Mr Waldron said, “The September quarter CPI data from the ABS, which will be released on 25 October, will likely determine whether the cash rate will remain on hold over the coming months. With the Spring season well underway, and Christmas fast approaching, hopeful buyers will need to act quickly if they want to buy property this calendar year.
“There are still hundreds of thousands of borrowers set to roll off their fixed rates over the next few months. I’d recommend these borrowers make time to speak to their broker and ensure they're prepared for the change in their repayments when their fixed term comes to an end.”