Homeowners can breathe a sigh of relief today after the Reserve Bank (RBA) held the cash rate at 4.1 per cent for July.
RBA governor Philip Lowe said the past 13 interest rate hikes were “working” to bring down inflation and would continue to do so, however did not rule out further rate hikes down the road.
“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve,” Lowe said.
Tough call for RBA
Finder head of consumer research Graham Cooke said the decision could have gone either way.
“The latest inflation figures made a strong case for the RBA to pause its series of rate hikes,” Cooke said.
“However, the RBA repeatedly states that its intention is to get inflation all the way to the target rate of 2-3 per cent and we aren’t there yet.
“While homeowners have been given a break this month, they should buckle up for further hikes this year.”
Aussies struggling to keep up
More than two in five Aussie mortgage holders – equivalent to 1.35 million households – said they struggled to pay their home loan in June, according to Finder’s Consumer Sentiment Tracker.
That was the highest proportion recorded since Finder began tracking the question in 2019.
Around one in five mortgage holders were also knocked back when they tried to refinance their home loan over the past 12 months, Finder research revealed. That’s an estimated 652,260 borrowers who were unable to switch banks.
Cooke said a refinance rejection would be a crushing blow to stretched mortgage holders.
“Thousands of homeowners are sinking under the weight of their home loan but have nowhere left to go,” Cooke said.
“Lenders are turning away borrowers in droves who can’t comfortably service a new loan, despite being more affordable than the one they are stuck with.”