RBA Cash Rate | May 2024

At its recent meeting, the Board kept the cash rate at 4.35%. Inflation remains high at 3.6% over the past year, decreasing slower than expected due to persistent services inflation and strong domestic cost pressures like labour costs. The labour market shows some easing but remains tighter than desired. Wages growth exceeds sustainable levels given productivity trends.

Economic projections are uncertain, with inflation expected to return to the 2-3% target range by late 2025, impacted by petrol price hikes and services inflation. Household consumption has weakened from high inflation and prior rate rises hitting real incomes, though stabilising incomes may aid consumption later.

Returning inflation to target remains the priority for the Board’s price stability and full employment mandate. It remains vigilant on inflation outlook risks from geopolitics and domestic conditions. The interest rate path to stabilise inflation is uncertain, with the Board adapting to new data and assessments.


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Australia's Housing Values Continue to Rise Steadily

The Australian housing market showed strong momentum in the first quarter of the year, with national home values rising 1.6% – the largest quarterly increase since late 2022. While the pace of annual growth has eased slightly to 8.8% as of March, down from 9.0% over the year to February, the underlying trends remain positive for property buyers and investors.

An interesting dynamic playing out is the continued outperformance of regional housing markets compared to the capital cities. Regional dwelling values rose 1.8% over the March quarter, outpacing the combined capital city increase of 1.5%. This marks the third consecutive quarter where the regional areas have led the way.

For expats looking to enter or add to their Australian property holdings, the ongoing strength in the housing market provides an attractive environment. Regional areas, in particular, may present opportunities to get more home for your money compared to the higher entry prices across the capital city markets.

CoreLogic - May COTM

Inflation Defies Expectations, Soaring Higher

Recent data has revealed an alarming surge in inflation rates, far exceeding economists’ predictions and sending shockwaves through global markets. In Australia, this unexpected spike suggests that interest rates may remain elevated for an extended period, disrupting previous forecasts.

Why This Matters to You

For anyone considering purchasing or refinancing a home, the trajectory of inflation directly impacts mortgage rates. Higher inflation typically prompts central banks, like the Reserve Bank of Australia, to maintain or increase interest rates to stabilise the economy. Here’s what you need to know:

  • Defying Predictions: Economists had anticipated a moderate rise, but the actual figures came in alarmingly higher, signalling robust and persistent price pressures across various sectors.
  • Potential Consequences: This development suggests a cautious approach from the Reserve Bank, potentially delaying any anticipated rate cuts. It’s a crucial factor for those looking to secure new mortgages or refinance existing ones.

Global Ripple Effect: The U.S. Economy's Influence

The U.S., often considered a bellwether for global financial trends, has also reported higher-than-expected inflation rates. This has cast uncertainty over the Federal Reserve’s plans, which previously indicated potential rate cuts later this year—now, all bets are off.

Navigating the Uncertain Landscape

As an Australian expat, staying informed about these global and domestic economic shifts is essential. Whether you’re looking to buy a new home or refinance in Australia, the current climate demands a strategic approach to secure the best possible terms on your mortgage.

Proactive Planning for Financial Success

We strongly recommend reviewing your current mortgage arrangements and considering how these changes might impact your plans. Consulting with a financial advisor familiar with both Australian and global economic landscapes can provide tailored advice, helping you make informed decisions and navigate this turbulent period successfully.

Get In Touch With Our Specialists Today!

The recent economic developments, including soaring inflation rates, and the continued strength in Australia’s housing market, underscore the significance of staying informed and proactively planning your financial strategy. As an Australian expat, it’s crucial to navigate this landscape with caution and seek professional guidance.

Consulting with experts who specialise in both Australian and global economic trends can empower you to make well-informed decisions about your mortgage and property investments. Don’t hesitate to take control of your financial future.

Book a meeting with our specialist mortgage brokers today, and let us guide you through this intricate economic landscape, ensuring that your mortgage and investment decisions align with your long-term goals.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.
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