RBA delivers ‘breather’ to homeowners, but renters still struggling

Homeowners can sleep easy for another month after the Reserve Bank of Australia (RBA) kept the cash rate on hold for September.

After aggressively hiking interest rates 12 times since May, 2022, the RBA has now kept the official cash rate steady at 4.1 per cent for the past three months.

Delivering his final interest rate decision as governor, Philip Lowe said inflation in Australia had passed its peak, but warned more rate hikes could be on the horizon.

• Also read: RBA’s Lowe makes final rates call: What happens next?

• Also read: Exact day CBA predicts RBA will cut interest rates

• Also read: RBA's dim forecast for the Aussie economy

Lowe warns of 'further tightening'

“The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so,” Lowe said.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks.”

Mortgage holders given ‘breather’

Finder head of consumer research Graham Cooke said today’s interest rate pause was “imminent”.

“Mortgage holders can take a breather from the relentless pressure of the back-to-back interest rate hikes – we may even see the rate stagnate until the end of the year. The outlook for the economy, though, is still uncertain,” Cooke said.

“We are seeing 40 per cent of homeowners struggle to pay their mortgage, with many fixed-loan holders facing dramatically higher payments over the coming months.

“Right now, it’s more important than ever to understand your interest rate, and find out if you could be getting a lower one.”

Renters still facing major challenges

While today’s pause is good news for mortgage holders, Aussie renters are still feeling the pressure.

Newly advertised rents have increased by 11 per cent a year over the past three years.

Finder research revealed 6 per cent of renters had relocated from a major city to a regional area in the past 12 months. A further 7 per cent were planning to relocate in the next 12 months.

Cooke said Australians in search of cheaper rent might opt for a tree change if they could.

“Tenants are facing record-high rents – with some being asked to fork out up to 50 per cent more with very little notice. This has led Australians to call for better legal protection for tenants,” Cooke said.

“If your rent is too high, moving to a lower-cost area may be the only option. On the other hand, with many employers asking workers to return to the office, the idea of working remotely may not be the panacea it once seemed.”

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