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Members of the broking industry have said that the decision to hold the cash rate will be welcome news to borrowers, hopeful buyers, and brokers alike.
After the board of the Reserve Bank of Australia (RBA) announced that it would hold the official cash rate at its current level of 4.35 per cent, members of the broking industry have been outlining what the move means for borrowers and brokers.
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The CEO of franchise brokerage Mortgage Choice, Anthony Waldron, said that he believed the board decided to keep the cash rate at 4.35 per cent given that current interest rates are putting downward pressure on Australia’s economic growth and inflation is continuing to ease.
“The RBA’s best tool to drive inflation towards its target range of 2–3 per cent is the cash rate, so while inflation is trending in the right direction, it’s still not low enough for the RBA to consider cutting the cash rate yet,” Waldron said.
He said that current home loan interest rates are “working as intended to slow the pace of growth in home prices”, with the PropTrack Home Price Index showing that national home prices rose just 0.22 per cent in August.
According to the Mortgage Choice CEO, it seems that many borrowers are expecting the cash rate to fall soon, with only 3 per cent of Mortgage Choice clients choosing to fix their mortgages in August, a trend that has continued into September.
Similarly, Angela Tracey, Loan Market’s chief marketing officer, said that buyers had “been encouraged’ by the increase in market listings, noting that there was “a rising element of FOMO with the talk of future interest rate cuts likely to bring more competition to the market”.
Tracey also said several banks had already priced interest rate cuts into their variable-rate mortgage offerings and that more borrowers were coming into market.
The Loan Market CMO said that the national mortgage brokerage had reported a 23 per cent increase in home loan applications across Australia for the start of the real estate selling season compared to the same time last year.
The brokerage group particularly saw strong growth in home loan lodgements across the eastern states in the period, with NSW up 45 per cent, Queensland up 22 per cent, and Victoria up 17 per cent.
Meanwhile, the executive director of wholesale aggregator Connective, Mark Haron, said he believed the cash rate decision was “good news”, but added that borrowers would still be under pressure.
Haron said: “A challenging housing market, inflation and rising cost of living continue to affect households.
“Brokers have demonstrated resilience and expertise in helping borrowers navigate one of the toughest economic conditions. As we enter the busiest selling season this spring, their role is even more important as home buyers look to access finance and borrowers seek to secure better terms.
“Our advice to brokers is to continue proactively reaching out to their clients. Ask them what their long-term goals are, and educate them about their financing options that are aligned with these goals. Emphasise responsible lending practices and never lose sight of acting in the best interests of clients.”
Looking forward, Finsure CEO Simon Bednar said he believed a cash rate reduction would be “unlikely” this year, due to ongoing concerns about inflation and the governor's recent comments.
“Inflation is still relatively higher than the RBA wants it to be so I expect no change in 2024 as they solidify any gains made this year and not spark inflationary pressure prior to Christmas,” Bednar said.
“I believe we’ll see our first rate cut in February next year, however, I would strongly stress that banks then will not pass on any reduction in full.
“That means consumers and brokers will need to be realistic about how rate cuts flow into mortgages and the broader economy. Banks will be striving to recover margin quickly.”
The RBA has kept the cash rate on hold since November 2023, when it decided to raise the official cash rate for the 13th time in this tightening cycle, which started in May 2022.
“With the rate increases making conditions tougher for mortgage holders, brokers have been playing a key role helping customers through the higher rates and the cost-of-living crisis,” Bednar said.
None of the major bank economists are forecasting a November rate cut, with the Commonwealth Bank of Australia moving out its expectations for a potential rate cut to December 2024.
NAB, Westpac, and ANZ, however, don’t expect the RBA to start its easing cycle until next year.
[Related: September-October cash rate decision called]
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