Record numbers of Australian homeowners are struggling with mortgage stress, but does that mean the RBA will be cutting interest rates?
According to the latest Finder RBA Cash Rate Survey, 47 per cent of homeowners are now struggling to pay their home loan in October, marking the highest level since records began in 2019.
Leanne Pilkington from Laing+Simmons think the RBA is waiting for more concrete evidence of falling inflation before a cut will take place.
“The signs are there though, so a rate reduction is warranted in the near term,” Ms Pilkington said.
The research found that one in seven borrowers, equivalent to 462,000 households, would need to sell or apply for hardship if interest rates remain unchanged until February.
Despite inflation falling to its lowest level since 2021, all 38 experts surveyed believe the RBA will hold the cash rate at 4.35 per cent in November.
Graham Cooke, head of consumer research at Finder, said Australian homeowners are facing unprecedented financial pressure.
“With emergency savings depleted and the RBA yet to signal significant rate cuts, many fear their livelihoods are at stake,” Mr Cooke said.
Almost three in four economists believe recent cash rate cuts in New Zealand and the United States will not influence the RBA’s stance.
David Robertson from Bendigo Bank said the RBA has been slower to act than other central banks.
“The RBA remains around 6 months behind other central banks such as the US and New Zealand who initiated their tightening cycles earlier, and hiked rates by significantly more,” Mr Robertson said.
The majority of experts still forecast a rate cut in the first three meetings of next year, with 78 per cent expecting movement by then.
Matthew Greenwood-Nimmo from the University of Melbourne said the RBA needs more evidence of declining inflation.
“Although headline inflation has dropped within the RBA’s target band, the trimmed mean measure is still above 3 per cent,” Mr Greenwood-Nimmo said.
“I suspect the RBA will keep the cash rate where it is until the trimmed mean has come down further.”
