There are just over 2 weeks left in 2024, and the Reserve Bank of Australia (RBA) has made their final call of the year. It’s been over 4 years since the last cash rate cut, and since then, the cash rate has skyrocketed to heights unseen since 2011. So, has December gifted us a cash rate cut?
The cash rate started 2024 at 4.35%, and to the disappointment of many, that’s how it will end the year. However, it only feels like a matter of time before the RBA makes the call and brings the cash rate down.
Internationally, rates are dropping. The Reserve Bank of New Zealand lowered its cash rate from 4.75% to 4.25% at the end of November, as inflation, like Australia, drops into the RBNZ’s preferred bandwidth. However, while New Zealand’s inflation is similar to Australia's, New Zealand is also struggling with high unemployment. As stated by the RBA:
“More jobs and higher wages increase household incomes and lead to a rise in consumer spending, further increasing aggregate demand and the scope for firms to increase the prices of their goods and services.”
What Does This Cash Rate Decision Mean For Homeowners?
Homeowners have seen their repayments spike over the last 3 years, and understandably, may not feel as though they are getting what they signed up for when they first purchased their home. If you’re struggling to meet repayments, you’re not alone, as 42% of Australian homeowners with a home loan have reported financial stress.
If you are struggling, let me know. While I may not be able make your mortgage troubles go away entirely, I may be able to help ease the pain by exploring refinancing options.
What Does This Cash Rate Decision Mean for Homebuyers?
High interest rates mean that if you purchase a home now, you’ll be paying more on mortgage repayments. However, home prices in key capital cities such as Melbourne and Sydney are on the decline. It’s likely only a matter of time until interest rates are cut, So purchasing now could be a good strategy to get ahead of any competition.
When Will Interest Rates Drop?
While we can’t say when the RBA will cut the cash rate, it’s looking more and more likely that it will be within the financial year. A majority of the major banks project a cash rate cut in May.
Whether you’re looking for home loan relief, want to get ahead of the home-buying rush, or want to build your investment strategy, reach out to me today to kick start your 2025 finance goals.
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