Nearly two years ago, the Reserve Bank of Australia (RBA) made the unprecedented decision to lower the cash rate to a historic low of 0.10 per cent, a strategic manoeuvre aimed at revitalising the economy.
However, this bold action inadvertently sparked a surge in house prices and propelled the economy to what some have deemed unsustainable levels.
In an effort to return inflation levels within the desired band of 2-3 per cent, thirteen rate rises increased the cash rate to 4.35 per cent where it currently sits. This ascent wasn’t without casualties. Rampant inflation plus the steady increase of variable interest rates left many mortgage owners struggling to repay their home loans and forced them to adjust their budgets.
Many experts are confident that we’ve seen the last of the interest rate hikes – which comes as a big relief to many mortgage owners who may continue to experience financial stress. There is now hopeful anticipation of interest rate cuts, as the latest Finder Survey revealed it is a near even split between expert panellists believing the rate cut will happen before September 2024, or afterwards.
In the statement of monetary policy released by the RBA, they disclosed that the monthly CPI indicator was steady at 3.4 per cent. The report explains further that inflation is expected to decline to the 2–3 per cent target range in 2025 and to reach the midpoint in 2026.
If you’re a homeowner, now is not the time to loosen up the budget. While there are many encouraging signs, the RBA report reveals that the economic outlook remains uncertain. Stay vigilant, but remember we have lending specialists available to assist with your questions and concerns.
Any advice provided is general in nature and should be considered in line with your financial situation, needs and objectives.
Source: WLTH