Property Finance Update - December 2023
- LoanCaddie
- Dec 8, 2023
- 3 min read
It’s hard to believe it’s already December, and what a year it’s been in the property world.
After falling -7.5% from a peak in April 2022 to a trough in January 2023, property prices have bounced 8.3% higher over the past 10 months, demonstrating a clear recovery.
In 2023, we saw the Reserve Bank of Australia (RBA) increase the cash rate five times. The Board ended the year by delivering a Christmas reprieve, pausing the cash rate at its final meeting.
If a summer property purchase is on your wish list this Christmas, speak to us about your finance options.
Interest rate news
It was an unlucky Melbourne Cup for homeowners, with the Reserve Bank of Australia lifting the cash rate to a 12-year high.
The Board decided to increase the cash rate a quarter of a percentage point to 4.35 per cent at its November meeting.
The cash rate will remain on hold for the moment at 4.35 per cent.
Annual inflation was 4.9 per cent in October, down from 5.6 per cent in September.
Economists were generally anticipating the October inflation to be 5.2 per cent, so it has slowed down by more than expected.
The RBA board will next meet in February. It would appear there may be further cash rate hikes on the horizon.
“While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected,” RBA Governor Michele Bullock said in a recent statement.
“CPI inflation is now expected to be around 3½ per cent by the end of 2024 and at the top of the target range of 2 to 3 per cent by the end of 2025.”
Major reforms recommended as part of the independent review of the RBA in April will take effect in the new year.
Among the changes, there will be eight monthly meetings to decide on the cash rate, instead of 11.
Many homeowners are now wondering how the changes will affect interest rate decisions and whether there will be larger jumps in the cash rate, given the RBA will have fewer chances to change it.
If you’re feeling the pain of the interest rate hikes, get in touch to discuss your options. We’ll check whether you could secure a more competitive home loan with another lender.
Home value movements
The cash rate will remain on hold for the moment at 4.35 per cent.
Annual inflation was 4.9 per cent in October, down from 5.6 per cent in September.
Economists were generally anticipating the October inflation to be 5.2 per cent, so it has slowed down by more than expected.
The RBA board will next meet in February. It would appear there may be further cash rate hikes on the horizon.
“While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected,” RBA Governor Michele Bullock said in a recent statement.
“CPI inflation is now expected to be around 3½ per cent by the end of 2024 and at the top of the target range of 2 to 3 per cent by the end of 2025.”
Major reforms recommended as part of the independent review of the RBA in April will take effect in the new year.
Among the changes, there will be eight monthly meetings to decide on the cash rate, instead of 11.
Many homeowners are now wondering how the changes will affect interest rate decisions and whether there will be larger jumps in the cash rate, given the RBA will have fewer chances to change it.
If you’re feeling the pain of the interest rate hikes, get in touch to discuss your options. We’ll check whether you could secure a more competitive home loan with another lender.
* Monthly Home Values figures as of 30 November 2023
* Australian auction results, clearance rates and recent sales for the week ending 3 December 2023
* The clearance rate is preliminary and current as of 8:30 a.m. 4 December 2023
Why not start 2024 with a BANG and a property purchase? Talk to us about organising pre-approval on your finance today.