Mortgage borrowers on edge as RBA warns interest rates could still rise | The Business | ABC NEWS
In a small reprieve for mortgage borrowers, the Reserve Bank kept interest rates on hold at 4.35 per cent. However, governor Michele Bullock warned the central bank may not be done with rate hikes, saying “we already raised three times, and we will go again if we need to.” Those previous rate increases are already having a major impact on the property market, with house prices falling in most capital cities, and major banks like Westpac and NAB seeing home loan applications plummet.
More broadly, Ms Bullock says the RBA board is concerned about the tight jobs market, AI boom and US-Iran war and inflation being far too high. The longer the Middle East war drags on, the more likely it is that businesses may have to permanently pass on higher prices to customers, she added. The governor also said she was not concerned about the financial stability risks of a property downturn.
According to the RBA’s latest forecasts, inflation is unlikely to fall back within its 2-3 per cent target range until late next year, assuming rates remain on hold. While the odds of interest rates going up at this meeting were close to zero, the probability of a hike by February next year is 78 per cent, according to the latest market pricing data. AMP economist My Bui expects the RBA will have to lift rates at least once more to keep rates at a more restrictive level. David Chau talks to one couple, who bought their home with the government’s 5 per cent deposit scheme and are finding to refinance with a different lender.
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