01.08.2024
According to the article of Broker Daily: As mortgage arrears rise, it’s crucial to identify warning signs that borrowers may be struggling, such as reduced savings, seeking additional credit, and living pay check to pay check. The RBA links these issues to unexpected shocks, including job loss, declining real wages, higher interest rates, and rising unemployment. Early intervention is key, with potential strategies like switching to interest-only loans, renting out rooms, or moving in with family. Despite the increase in arrears, low unemployment and refinancing options have helped stabilise the market. Our current challenge remains high interest rates.
Our Perspective on the RBA’s Interest Rate Policy
The Reserve Bank of Australia’s (RBA) interest rate policy is quite insightful. From a macro-economic perspective, it’s reasonable to expect that the RBA will adjust its interest rate policy in the upcoming meetings, guided by indicators like inflation and unemployment rates.
Increasing Rates Before Decreasing: We see a strong possibility that the RBA might continue to raise interest rates, especially in the August, and September meetings. This approach aims to tackle current inflationary pressures and create room for potential future rate cuts. It also helps in stabilising market expectations and preventing inflation from escalating.
Potential Rate Cut in Early 2025: We foresee that a rate cut could occur in the first quarter of 2025. This move would likely be in response to the risks associated with slowing economic growth, providing more leeway for future economic stimulus.
Maintaining a Higher Interest Rate Environment: Our analysis supports the notion that maintaining a relatively high-interest rate environment over the next 18 to 24 months is essential. This strategy ensures we have sufficient room for rate cuts to manage future economic fluctuations effectively.
Given the current economic data and market trends, our view aligns with the expectation that the RBA’s decisions will be shaped by both global and domestic economic conditions. Staying updated with these indicators and RBA statements will be crucial for accurate forecasting.
Flexibility for Borrowers: Amidst these changes, as your trusted partner in non-bank lending, FINSTREET supports brokers and their clients in navigating the challenges of an ever-changing and dynamic market. We offer increased flexibility to borrowers with more tailored lending solutions and adaptable terms. We can help individuals navigate fluctuating interest rates and manage their financial needs more effectively.
