March 07, 2023
At its March monetary policy meeting, the Reserve Bank of Australia raised the nation’s official cash rate by 25 basis points to 3.60%.
Speaking about the decision, Mortgage Choice CEO Anthony Waldron said, “A 10th consecutive rate hike in as many months won’t be welcome news to borrowers or prospective buyers. We’re starting to see signs that the aggressive rate increases are having the desired effect on inflation, but today’s decision shows the RBA doesn’t think the rate rises have had sufficient impact just yet.”
“We can expect lenders to pass on today’s rate rise so I would encourage borrowers to check in with their mortgage broker to ensure they’re still getting the best rate they can. Most lenders on our panel are offering cash back deals for borrowers looking to refinance, but it’s important you speak to your broker before switching to understand if refinancing is the right move for you.”
The latest data from the Australian Bureau of Statistics (ABS) shows the monthly Consumer Price Index (CPI) indicator rose 7.4 per cent in the year to January 2023, however it was the second highest annual increase since the start of the monthly CPI indicator series in September 2018. ABS data also shows that economic growth slowed in the December quarter. Although the ABS reported the fifth consecutive rise in quarterly GDP in December 2022, growth slowed in each of the last two quarters.
PropTrack Senior Economist, Eleanor Creagh, said “While recent communications from the Reserve Bank have been hawkish, the latest wage price data came in below expectations, indicating the breakout in wages growth is not as bad as feared and alleviating some of the concerns around an imminent wage price spiral. There’s also mounting evidence that household spending is slowing as the substantial tightening already pushed through weighs on households.
“Sellers in market now are benefiting from low competition with other vendors, as buyers vie for available stock. The constrained level of properties available for sale has concentrated buyer demand and is ‘putting a floor’ under home prices to a degree.”
Mortgage Choice home loan application data shows that borrowers’ loan type preferences have remained stable, with 94% choosing chose variable rates in February, the same proportion that chose a variable rate home loan in January.
Data from ABS shows that demand for home loans has nosedived. ABS Lending Indicators show that in January 2023, new loan commitments (seasonally adjusted) fell 5.3% for housing, 35% lower than a year ago. The data revealed that the number of new owner-occupier first home buyer loan commitments fell to its lowest level since February 2017. The value of owner-occupier housing loan refinancing between lenders fell 1.9% but remained close to record highs at $12.7 billion.
The PropTrack Home Price Index revealed that national home prices were up 0.18% in February 2023, with all capitals aside from Hobart seeing prices rebound. Adelaide (+0.44%), Sydney (+0.36%) and Melbourne (+0.18%) recorded the largest jumps as tight stock levels have kept competition concentrated, insulating home values. The pace of home price falls has eased in recent months, with the housing market downturn now stalling. However, it is too early to call an end to the downturn.
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