November 5th 2024.
For those struggling with mortgage payments, the wait for relief will continue as Australia's central bank has announced that interest rates will remain unchanged for the eighth consecutive meeting. The Reserve Bank of Australia made this decision just 30 minutes before the start of the highly anticipated Melbourne Cup race. The bank stated that the cash rate target will remain at 4.35 percent, a level that has been maintained since November 2023.
The RBA's monetary statement acknowledged signs of a slowing inflation rate, but also emphasized the need for cautiousness in their approach to monetary policy. The Board will continue to closely monitor data and assess risks in order to guide their decisions. This includes paying attention to global economic and financial market trends, as well as domestic demand and the outlook for inflation and the labor market. The Board is committed to achieving their target inflation rate and will take necessary measures to do so.
Despite predictions from Australia's four largest banks that the first interest rate cut will not occur until February of next year, Canstar's data insights director Sally Tindall cautions against making guarantees when it comes to the RBA's movements. Tindall believes that the RBA will remain inactive in 2024, but there is no certainty that they will make any changes in the first meeting of 2025. She also suggests that borrowers take a closer look at their current interest rates and explore other options if necessary.
Tindall points out that while nearly one million loans have been refinanced since the start of the cash rate hikes in May 2022, there are still many borrowers who have not taken advantage of this opportunity. She encourages borrowers to not become complacent and to regularly evaluate their options to ensure they are getting the best deal.
Money editor at ratecity.com.au, Laine Gordon, believes that the long period of unchanged interest rates has led to some competitive offerings in the market for borrowers. While the cash rate has remained the same for almost a year, variable home loan rates have started to decrease. Gordon notes that around 70 banks have lowered at least one variable home loan rate in the past year, but not all customers have seen a decrease. She advises borrowers to compare their current rate with what other banks are offering and make changes if necessary.
As the national loan size in Australia reaches a record high of $642,121, the majority of borrowers continue to opt for variable rates. Only 2.6 percent of new loans are choosing fixed rates, despite rising property prices and the increasing cost-of-living crisis. Lending to first-time home buyers has also increased, showing a rise of 8.8 percent to $5.21 billion.
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