The property market could see a period of reprieve, with potentially no more rate rises before August, stabilising sentiment, as banks are split on cash rate expectations.
The National Australia Bank (NAB) has adjusted its forecast for the next cash rate decision, predicting the Board would wait until August's meeting to make a call following a jump in unemployment.
Recent Australian Bureau of Statistics (ABS) data found that unemployment had jumped to 4.5 per cent in its April data, the highest seasonally adjusted rate since November 2021.
According to Canstar’s data, a 0.25 percentage-point cash rate hike would see the monthly repayments of home owners with 25 years remaining on their mortgages rise by $92, for a total increase of $364.
The research showed that an owner-occupier who took out a mortgage five years ago and had not renegotiated their loan would find themselves with a variable rate of 7.01 per cent.
Canstar.com.au data insights director Sally Tindall said the Reserve Bank of Australia (RBA) were already likely to hold in June as they assessed the impact of the war in the Middle East and three cash rate hikes, with the unemployment figures providing another reason to pause.
“While one month of data doesn’t make a trend, the jump in unemployment suggests higher interest rates could now be starting to bite,” Tindall said.
“A pause in June will offer a much-needed breather; however, borrowers shouldn’t mistake it for a peak.”
Across the market, the major banks have been split on their views on future rate changes.
While Westpac and NAB have been predicting further hikes, the Commonwealth Bank of Australia and ANZ have forecasted no more change in the near future.
Tindall said that while the cost-of-living crisis wasn’t going away, research showed that banks were still competing for quality borrowers, presenting an opportunity for home owners to secure a better deal.
“While a hold in June is by no means guaranteed, this potential reprieve is a window to shop around and shore up your budget.”
“If you are now sitting on a rate starting with a seven, you are essentially paying a big fat loyalty tax to your bank, especially as an owner-occupier.”
“Canstar research shows borrowers who haven’t reviewed their loan in years could potentially save more than $11,000 over two years simply by switching from an average variable rate to one of the more competitive offers currently on the market,” Tindall concluded.
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