RBA Governor Philip Lowe
The RBA has kept the cash rate at 4.10 per cent. Source: Reserve Bank of Australia.
  • The official cash rate remains 4.10%.
  • This marks the third consecutive pause on interest rates.
  • Experts are divided on whether interest rates have peaked this year.

The reprieve for millions of Australian mortgage holders continues with the Reserve Bank of Australia (RBA) issuing a third consecutive pause on interest rates.

With mortgage owners across the country having been dealt 12 rate rises since last May, the news is sure to be met with sighs of relief from Australians struggling to keep up with loan repayments.

RBA Governor Philip Lowe says the pause will provide further time to assess the impact of the increase in interest rates and the economic outlook.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks,” he said.

Steadying the housing market

Momentum Wealth managing director and past president of REIWA, Damian Collins, says the RBA’s move to leave the cash rate unchanged was expected by economists and the big four banks given Australia’s inflation rate has continued to ease. We’ve also seen a continued slowdown in building approvals and more recently a slowdown in household spending.

“The housing market is still relatively strong due to the low supply and this rate pause will give home buyers and investors more confidence to enter the market,” said Collins.

PropTrack senior economist, Eleanor Creagh, agreed with Collins’ assessment.

“The decision by the Reserve Bank to continue holding the cash rate steady in September is likely to maintain both buyer and seller confidence as the spring selling season begins, with home prices likely to continue lifting in the period ahead,” she said.

LJ Hooker head of research, Matthew Tiller, added: “If inflation does get sticky then there is still the potential to increase rates again, but for the moment it is trending downwards and this will give both buyers and sellers the confidence to take action as we head towards the end of the year.”

“Steady interest rates mean buyers will feel comfortable with their existing mortgage or financial arrangement and can budget with more certainty for their next property purchase.

“Those looking to sell because of mortgage pressure will also feel relief because property prices have been increasing and it will allow them to downsize to something more affordable.”

However, CoreLogic head of research, Eliza Owen, offered a different perspective, saying that consumer sentiment remains around recessionary lows and it might be too soon for a pause in interest rates to have a significant impact on transaction activity.

“Although prices have trended higher in the past few months, a more robust recovery in housing market activity is likely to be constrained by high interest rates and affordability hurdles in the short term,” she said.

“While a pause in the cash rate may gradually instil more confidence in the market, this is still very much an uncertain and thinly traded upswing.”

Have rate rises peaked?

The Property Tribune reached out to experts for their opinion on whether another rate rise would be issued in 2023. Experts were divided, with just over half saying interest rates have peaked and others predicting another rise soon.

Zippy Financial director and principal broker, Louisa Sanghera, says “With the latest monthly inflation indicator falling more than market expectations, it’s becoming increasingly clear that the rising interest rate cycle has likely come to an end.”

But certified financial planner at What If Advice, Ashley Bishop, noted that the RBA’s analysis does not have inflation getting back to its target of 2 to 3% until the end of 2025.

“This leaves a narrow pathway to maintaining the current 4.1% cash rate prior to Christmas, any negative data or event would make a further rate rise much more likely than not,” he said.

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