Another month and another decision on interest rates, with the RBA holding rates once again at 4.35%. While its nice to see a sustained halt to the rapidfire increases of 2022 and 2023, mortgage holders that are now regularly paying anything from 6% to 8% (or more) would have been more excited had there been any sign of a reversal rather than just a pause.
Reports of the impending doom of a mortgage cliff, where homeowners would see their fixed rates expire and 2% triple (or worse) overnight have for the most part been unfounded, or at least mitigated, with little to no immediate impact on pricing seen thus far, even as the majority of those that had been lucky enough to lock in their rates at record lows have joined the rest of us in the variable market.
The number of mortgagee sales in our neck of the woods remains minimal, and there has been no great influx of desperate sellers – in fact the opposite continues to hold true for the moment with a distinct lack of stock available in virtually every suburb and price point. If you can find more than a single page of search results in a suburb at the moment, then you are probably looking with a pretty broad scope.
Belts have absolutely tightened though, as anyone (with or without a mortgage) can well attest to in the current climate. Rents are higher, groceries are higher, and if you have a $500,000 mortgage, you would be paying an extra $1000 per month (or more) at today’s rates than you might have 2 years ago.
While there is some gloom in those figures, the strength of current property pricing means that even those feeling the pinch the most with their mortgage are likely sitting on significantly increased equity positions as the value of their home has risen over the past few years. This extra money (even on paper) often being sufficient to support a refinance (with higher equity giving more leverage on rates) and stave off the effect of some of the interest rises.
The general consensus at present is that rates are likely to stay put til at least the end of 2024 before nudging back. If anyone at the RBA feels like moving quicker on that though, well I dare say there are a few (million) homeowners that wouldn’t object.