Australian banks see end to rate hikes, forecast modest growth
Westpac and the other three major Australian banks said they expect the Reserve Bank of Australia to pause its rate-hiking cycle after November, with the first cuts not due until 2027 and overall economic growth projected to remain modest. Earlier in the cycle, mortgage broker John Maxwell urged homeowners to refinance as the Reserve Bank’s recent cash-rate hikes pushed variable loan costs higher, Real Estate reported. The RBA then lifted the cash rate to 4.85%, an 18-year high, prompting economists and banks to advise borrowers to review expenses, according to News.com.au. An economist quoted by The Age noted that while higher rates increase mortgage payments, they also raise returns on savings for many households. The Age also cited economists who said rate hikes remain the main tool to curb inflation in both the United States and Australia.
The Conversation highlighted that underlying inflation in Australia has lingered around 3.5%, leading the RBA to tighten policy more frequently. The Commonwealth Bank said mortgage arrears rose to 0.80% of its portfolio in the September quarter while profit held at A$2.8 billion, The Age reported. All four major lenders subsequently raised variable mortgage rates above 6% after the RBA’s 25-basis-point increase, News.com.au noted. A Guardian survey found rising mortgage arrears and growing consumer anxiety as high inflation and a slowing labour market persisted.
