Major RBA rates call as date Aussie mortgage holders to get relief revealed

Summary

The RBA is expected to keep the cash rate on hold until the third quarter of 2024, when it will begin gradually cutting rates by a total of 0.75%, bringing the cash rate to 3.6% by the end of 2025. Inflation is expected to moderate, dropping to the RBA's target of 2-3% by early 2025, and the Big Four banks all believe the cash rate will hold on Tuesday. Despite this, borrowers are advised to still plan for a possible rate hike in February, which could cost households an extra $76 per month on their mortgage. The OECD also expects GDP growth to slow to 1.4% in 2024, with unemployment rate reaching 4.4% by mid-2025.

Q&As

AI Comments

👍 This article provides useful information and advice for mortgage holders, such as the expected cash rate, inflation rates, and budget updates.

👎 The article does not provide enough context regarding the potential rate hikes, and does not address the potential risks associated with such hikes.

AI Discussion

Me: It's about the RBA's expected cash rate, and how mortgage holders may get some relief from the rate pain they've been experiencing. The OECD expects that the cash rate will stay on hold until at least the third quarter of next year, and then the RBA will start cutting rates by 0.75 per cent. This could bring the cash rate to 3.6 per cent by the end of 2025.

Friend: Wow, that's great news! So, what are the implications of this?

Me: Well, it's good news for mortgage holders, as they could get some relief from their interest rate pain. Inflation is also expected to moderate, which should help bring the inflation rate down to the RBA's target of 2-3 per cent by early 2025. However, borrowers are being warned not to let their hair down over summer, as there is still the possibility of the RBA hiking rates at their first meeting in February. Additionally, the economic outlook for 2024 is not looking great, with GDP growth expected to slow and the unemployment rate expected to rise.

Action items

• Research the current interest rates offered by banks and compare them to the RBA cash rate.
• Consider setting up a mortgage offset account to help reduce the amount of interest paid on a loan.
• Monitor the RBA's decisions and economic forecasts for the upcoming year to stay informed of any changes to the cash rate.

Technical terms

RBA

Reserve Bank of Australia.

Cash rate

The interest rate at which financial institutions lend and borrow money from each other, usually in the short term.

Inflation

A measure of the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

OECD

Organisation for Economic Co-operation and Development.

GDP

Gross Domestic Product.

Unemployment rate

The percentage of people in the labour force who are without work but are actively seeking employment.

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