In a surprise to economists and markets, the Reserve Bank of Australia left the Official Cash Rate unchanged at 3.85 per cent at the last RBA meeting. All four major banks had been predicting a 0.25 per cent cut, factoring in easing inflation and evidence of a slowdown in economic growth. But the RBA opted to await greater clarity from forthcoming inflation readings before making any move.
Big Banks Revise Forecasts but Hold Optimism
After the RBA’s call, the Big Four banks all altered their forecasts. Despite the briefest of pauses, all four still foresee multiple interest rate cuts in the months to come:
- Commonwealth Bank is tipping a reduction in August and another in November, taking the cash rate down to 3.35 per cent.
- Four rate cuts are tipped by Westpac in August, November, February, and May, which would bring the cash rate to 2.85 per cent.
- NAB is tipping reductions in August, November, and February to take the rate down to 3.10 per cent.
- ANZ has August and November cuts, also delivering a 3.35 per cent cash rate.
A consensus like this from the big banks is a clear sign that buyers need to be getting ready at the moment.
Fixed Rates Tumble, Pre-empting RBA Action
The RBA has so far held off, though a number of lenders have already been reducing their rates on fixed home loans. This suggests that the lending industry anticipates lower rates in the near future and is front-loading adjustments now in order to remain competitive.
The effect on borrowers is concrete, according to Canstar numbers, that could save someone with a $600,000 home loan between $180 and $350 a month if it all goes ahead. Now that those fixed rates are as low as 5.5 per cent in some instances, it is a good time to look at what you have or to refinance.
Look Beyond the Lowest Rate.
The headline rates are often not the full story. How lenders evaluate applications is largely influenced by factors including your loan-to-value ratio, your type of employment, and your loan structure. These details can mean that two applicants for the same product can produce different results.
This is where a mortgage broker or a buyer agent comes into play. They provide lending and loan matching services, don’t just show you the lowest advertised rates, and match you with lenders and loans based on what’s best for your financial situation.
The Economy Sends Mixed Signals
Australia is still seeing strong job figures, and that has also given the RBA confidence to wait. Meanwhile, the country is now in a per capita recession, meaning that the average person is worse off economically, even though the economy has kept growing.
Time is something critical in this unique environment. Once the RBA sees the right CPI track, the cuts could follow quickly. And with them, the housing market could change just as quickly.
Buyers often wait until cuts are official. But by that point, prices are usually going up, listings move quickly, and competition heats up. Those who move quickly, even on the basis of slight alterations to bank behaviour and rates of lending, often get better properties at a better price.
Moving now may buy hedge funds access to calmer waters, more bargaining power, and a more flexible financing structure. And waiting could also mean getting caught up in the stampede when rates start making headlines for the cuts beginning.
At Investmate, our aim is to help you buy with clarity and not pressure. We help take you through lender policy changes, local market movements, and financing approaches that get you ahead of the curve. First-time homebuyer or seasoned investor, our buyer agents operate on your timeline, objectives, and financial setup.
Our expert buyer’s agents know how to get into tight markets to secure off-market deals for our clients. Get in touch with us at Investmate so that one of our experts can assist you with finding the best options. Call us at +61421942049 or book a call at Investmate.com.au and take the first step towards smarter property investing now to take action immediately. A quick chat may reveal the opening you have been waiting for.