The latest 0.5 percentage point RBA rate hike is set to be passed through in full, bolstering bank profits but adding to headwinds as loan levels and approval rates fall.
Despite declining house prices, the, its highest level in three years, to rein in inflation.
“There is a tendency to gravitate towards characterising tightening monetary policy in a negative light and naturally so, given the impact on cost of living. However, it’s important to remember that given everything that has happened, rates returning to normal because of tight labour conditions and economic growth is a problem we want to have.”, an annualised rate of 10 per cent, with bigger falls of 17 per cent in Sydney and 13 per cent in Melbourne.
On a $1 million mortgage, the increase after the three rises is $665 a month; on a $500,000 loan, the lift is $333 a month. The pain is not over: homeowners potentially face another double rate rise in August.House prices could fall by 15 per cent from their peak in April, marking the deepest downturn in Australia’s modern history, Capital Economics said.
Next year, the expiry of fixed rate deals is expected to drive a wave of bank switching, to which banks could respond with discounts for quality customers. Last week, CBA cut standard variable rates by 15 basis points for new borrowers with a deposit of at least 20 per cent.
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