Cash-strapped mortgage holders might receive an early Christmas present this year, as hinted by a recent survey from Finder.
In the latest Finder Reserve Bank of Australia (RBA) Cash Rate Survey™, insights from 36 experts and economists were sought regarding future cash rate movements and the broader economic landscape. While a significant majority (81%, 29/36) anticipate the RBA will maintain the cash rate at 4.35% in August, almost one in five (19%, 7/36) forecast an increase.
Interestingly, about one in four economists (26%) predict the RBA could introduce the first cash rate cut by the conclusion of its December meeting. Graham Cooke, Head of Consumer Research at Finder, suggests that the decision hinges on recent inflation figures, which, although persistent, haven’t risen sufficiently to justify a rate hike. The June quarter Consumer Price Index (CPI) data aligned with expectations, dampening the likelihood of an immediate rate increase. However, Cooke hinted at the potential for a rate cut by year-end.
Despite the consensus for August, opinions on the future direction vary. Evgenia Dechter from the University of New South Wales and James Morley from the University of Sydney present contrasting views. Dechter expects stability due to slowing inflation and economic activity, while Morley anticipates a rate hike to underscore the RBA’s commitment to controlling inflation, possibly followed by rate cuts in the new year to rebalance the cash rate.
The broader impact on Australian homeowners is profound, with a record 41% reporting struggles with their mortgage payments in July, marking a significant increase from June. This trend of escalating mortgage stress has been consistent since 2021, pushing many Australians towards financial strain.
Finder’s research also revealed a grim outlook on economic sentiment. Confidence in key economic indicators—housing affordability, employment, wage growth, cost of living, and household debt—has plummeted to a record low 7% in August. The perspective on household debt is particularly bleak, with none of the experts foreseeing improvements.
In response to these challenging times, Cooke encourages Australians to explore ways to maximize their financial resources. Initiatives like Finder’s Financial Fitness Challenge offer practical strategies for overcoming the heightened cost of living, potentially saving thousands for both renters and homeowners.
Experts continue to monitor inflation closely. Several cited the need for the RBA to increase rates to combat inflation. Others, acknowledging the complexity of the current economic landscape, anticipate the RBA will hold the rate steady. This divergence reflects the uncertainty and variety of pressures facing Australia’s economy, including global influences, domestic inflation trends, and evolving market conditions.
Despite the divide, the anticipation of a potential rate cut before the year ends offers a glimmer of hope for many Australians feeling the pinch. While the path forward remains uncertain, this survey underscores the balancing act the RBA faces in navigating economic recovery, inflation control, and the well-being of Australian households.
