Mortgage holders call on the Reserve Bank to cut interest rates

In the ever-turbulent sea of the housing market, many homeowners are clinging to the lifebuoy of potential interest rate cuts to stay afloat.

According to recent survey data by Mozo, a staggering 71 per cent of mortgage holders are gasping for the financial aid that a rate cut could provide. With the Reserve Bank of Australia (RBA) set to meet on 17-18 February, the nation’s borrowers are hoping for a favourable outcome.

The survey shows that 10 per cent of respondents are completely reliant on a February rate cut to stay on top of their finances, while 23 per cent are heavily reliant, and a further 48 per cent are somewhat reliant on such a cut.

The reliance on the RBA’s decision is a symptom of the pressure felt by homeowners after enduring consecutive rate hikes. Rachel Wastell, a Mozo money expert, voices concern over this dependency, saying, ‘Nearly three-quarters of mortgage holders are relying on an interest-rate cut from the RBA to keep on top of their repayments, as they continue to struggle with the impact of 13 rate hikes.’

‘This is concerning because homeowners are essentially counting their chickens before they hatch when there is no guarantee the RBA will deliver a rate cut next month.’

The bond markets have shown fluctuating confidence in a February rate cut. IG market analyst Tony Sycamore notes that while there was a 65 per cent chance factored in at the start of trading on a Thursday, by the afternoon, the odds had cooled to 58 per cent.

However, there is a silver lining on the horizon, as markets are fully priced for a rate cut at the RBA’s April 1 meeting.

Should the RBA decide to lower rates in February, Mozo’s survey suggests that Australians across all generations would likely save the extra cash from the first rate cut. The exception to this trend is the baby boomers, who would prioritise paying off other debts before their mortgage.

Meanwhile, the younger generation is reportedly more inclined to invest the additional funds than their older counterparts.

‘The good news is, if the RBA does cut rates, saving is the number one choice across all generations. This shows that Aussies are trying to use any windfalls to get ahead financially, and are being smart with their finances,’ explained Ms Wastell.

stressed older couple looking at finances
Are you also hoping for a rate cut?

However, if the RBA does not come through with the rate cut, Ms Wastell advises that waiting for a rate cut is not the only strategy.

‘Refinancing your mortgage now could give you a rate cut today, with no RBA decision required. Or, if you cannot afford to refinance, comparing the rates on offer from other lenders could give you the ammunition you need to negotiate a lower rate for your current home loan.’

As we await the RBA’s decision, it is crucial to remember that hope is not enough strategy. Proactive measures, such as refinancing or negotiating better rates, could provide immediate relief that a rate cut may not.

We would love to hear from you, our YourLifeChoices community. Have you felt the pinch of rising interest rates? Are you considering refinancing, or have you already taken the plunge? Share your experiences and tips in the comments below – your insights could be the lifeline another reader needs.

Also read: Retiring with debt? Experts explain downsizing, using super for your mortgage, and pension eligibility

Floralyn Teodoro
Floralyn Teodoro
Floralyn covers different topics such as health, lifestyle, and home improvement, among many others. She is also passionate about travel and mindful living.

3 COMMENTS

  1. Cutting rates would be disastrous while inflation is so high. Young people faced with the terrible house unaffordability we now suffer, will be particularly hard hit. Property experts are predicting that if the RBA cuts the rate another surge in property values will result.

    A question for the pundits advocating a rate cut: Do you really want that?

    By failing to raise rates since November 2023 we have been subjected to high inflation much longer than comparable countries, which slew the Inflation Dragon by swift action to get the cash rate up to an effective figure.

    Bad enough that the rate is too low, but to actually cut it now would be a very bad idea.

    Reality check: the debate is dominated by mortgage issues, but only one-third of households have mortgages; thus two-thirds of households do not. In sharp contrast, Inflation hurts 100% of us, cruelly so for those on low incomes.

    Hence the obsession with mortgage costs is a classic case of the tail wagging the policy dog.

    We definitely need a survey asking whether people’s main concern is inflated prices for goods and services, rent and energy OR interest payments.

    Then perhaps we can achieve a rational perspective.

  2. No mention of renters. However, the reason we have high interest rates is because inflation has been rampant. If you want to stop inflation you need to stop spending, something this government seems impervious to. So vote this mob out first, stop the wasteful spending, then lower interest rates. It’s fairly simple unless you ignore the process.

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