Sydney, Nov 1: Homeowners are grappling with unprecedented mortgage stress, with 47 per cent struggling to meet repayments in October, according to Finder’s latest RBA Cash Rate Survey.
The survey revealed a significant 14 per cent of borrowers, around 462,000 people, may need to sell or apply for hardship if rates persist until February.
Furthermore, 39 per cent of mortgage holders plan to reduce spending to manage their mortgage costs over the coming months.
In a unanimous decision, all 38 surveyed experts forecast that the Reserve Bank of Australia (RBA) will hold the cash rate steady at 4.35 per cent in November.
Despite a reduction in headline inflation, which now sits within the RBA’s target range for the first time since 2021, underlying inflation remains elevated.
Graham Cooke, head of consumer research at Finder, acknowledged the challenges homeowners face amid rising financial pressures.
Although a rate cut is not expected before year-end, experts predict multiple cuts will likely occur in 2025.
“Homeowners eagerly awaiting a rate cut before Christmas will have to hold on a bit longer for some relief,” said Cooke, adding that 2025 almost certainly promises multiple cuts.
Leanne Pilkington of Laing+Simmons suggested that while inflation trends may support a rate reduction, the RBA appears determined to wait for more consistent data.
University of Melbourne’s Matthew Greenwood-Nimmo echoed this view, citing that while headline inflation has improved, the RBA may hold rates until a deeper decrease in underlying inflation.
Other economists shared this cautious approach, emphasising the persistence of underlying inflation and the need for more stable indicators.
Brodie Haupt from WLTH commented that while inflation is easing, underlying inflation remains at 3.5 per cent, making a hold decision likely.
“We’re trending in the right direction as CPI inflation eases to 2.8 per cent,” said Haupt. Andrew Wilson from My Housing Market echoed this sentiment, pointing out that “Inflation’s preferred measure still remains above target.”
While some countries have started easing monetary policy, Australian experts are not convinced this will influence the RBA.
According to 71 per cent of surveyed economists, rate cuts in the U.S. and New Zealand are unlikely to impact Australian policy.
Shane Oliver from AMP stated that while global rate cuts are promising signs, they won’t automatically prompt action from the RBA, as the board remains focused on Australia’s economic conditions. David Robertson from Bendigo Bank added, “The RBA remains around six months behind other central banks such as the US and New Zealand, who initiated their tightening cycles earlier.”
As economic sentiment inches upward, Finder’s Economic Sentiment Tracker shows housing affordability and household debt are still major concerns.
David Robertson noted that while inflation is moderating, progress is needed for a potential rate cut, which he suggests may arrive in mid-2025. Aarti Singh from the University of Sydney emphasized that although the latest CPI numbers align with the RBA’s target, measures that exclude volatile items are still outside the target band.
The uncertainty around rate cuts is keeping many homeowners on edge.
For struggling Australians, Cooke advised immediate action, suggesting that homeowners contact their lenders for potential rate reductions or refinancing options as a means to ease their financial burden in the lead-up to Christmas.
“This could prevent a wave of financial hardship,” Cooke cautioned. “If lenders refuse to lower the rate, exploring refinancing options could make a crucial difference.”
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