MORTGAGE holders have been told to expect another hip pocket hit this year, with experts predicting the Reserve Bank’s 12th cash rate hike is unlikely to be its last.
Meanwhile impacts to property prices remain doubtful as a shortage of listings and high demand drive growth.
Raine & Horne executive chairman, Angus Raine, said the potential impact of the Reserve Bank’s decision was concerning for homeowners struggling to manage rising mortgage and energy expenses.
He said the RBA has indicated there could be a need for further actions to tighten monetary policy in order to achieve its inflation target of 2-3% within a reasonable timeframe.
“It is desirable for the RBA to permit the recent rate hikes to filter through the economy, particularly as more homeowners’ transition from fixed rates in the upcoming months,” he said.
“Halting the increase in interest rates next month, coinciding with the start of the 2023/24 financial year, would provide relief to small businesses that are struggling with mounting financial burdens, including rising expenses for fuel and equipment.”
With the unemployment rate expected to continue to lift in the coming months, PropTrack senior economist Eleanor Creagh said it could once again mean buyers become more cautious as their sense of job security waned.
“The current pace of price growth would also wane if stronger market conditions improved seller confidence and spark a boost in stock coming to market in spring,” she said.
“Though, by that point interest rates could have stabilised easing buyer concerns. Interest rates are already closer to their peak than not, and the shock of rate rises has lessened.
“With the bulk of interest rate tightening in the rear-view mirror, much of the uncertainty buyers have experienced with respect to borrowing capacities and mortgage servicing costs is subsiding, meaning a better sense of how far their budgets may go.”
ANZ has predicted a cash rate peak of 4.35%, and its head of Australian economics Adam Boyton said risks were likely skewed toward the RBA needing to move more than just once more.
“Given our own views about the outlook for productivity, unit labour costs and the stickiness of services inflation we continue to expect another 25bp increase from the RBA, most likely in August,” he said.
