Latest news with #interest rate cuts
Daily Telegraph
6 hours ago
- Business
- Daily Telegraph
Bombshell way RBA interest rates relief is backfiring
Recent Reserve Bank rate cuts have been spurring home buyers to rack up larger amounts of debt – and now the pressure is boiling over, with households beginning to feel the strain. New Roy Morgan polling has revealed the proportion of households now at risk of 'mortgage stress' is level with figures reported in January – before the first of this year's two cuts were announced. About 28 per cent of mortgage holders were reported to be 'at risk' of mortgage stress in June, up from the period just after the most recent cut in May. MORE: 150 buyers for each home: house threat coming About 1.3 million Aussies are experiencing mortgage stress, 684,000 more people than in early 2022 – before the first of 13 interest rate hikes over that year and early 2023, according to Roy Morgan. Mortgage stress was defined as households spending a disproportionate or unsustainable amount of their incomes on keeping a roof over their heads. Roy Morgan chalked up the rise in stress to larger borrowing amounts taken out by people buying homes and larger amounts outstanding on home loans generally. It's an alarming twist to the economic relief meant to come from the RBA's double whammy of cash rate cuts, first in February and then again in May. MORE: Couple's power move gets them 18 homes, $11m Economists said mortgage stress levels surging back to where they were in January, before any cuts were made, was concerning. The figures suggest a brief dip in repayments offered by the RBA cuts was quickly swallowed up by borrowers stretching their budgets to the limit just to get into the market — or upgrade. Bigger debts have come as households battled a lethal cocktail of other ballooning costs, including skyrocketing insurance, council rates and power bills. It will take another 0.25 per cent interest rate cut to break the cycle of rising mortgage stress, Roy Morgan noted. Roy Morgan CEO Michelle Levine said households' rising debt levels were not surprising given recent home price rises. MORE: Bargain homes list exposes brutal Sydney truth She said the figures suggest recent cuts have only provided temporary relief for the mortgage market as a whole. 'These results show although reducing interest rates generally does lead to lower levels of mortgage stress, this effect may only be short-term as new buyers entering the market are able to borrow more money for larger loans to get into the market, thus leading to an increase in mortgage stress,' she said. Ms Levine said the outlook for mortgage holders over coming months looked more positive. Ten successive months of falling inflation, which has left inflation within the target range of the RBA, suggested more interest rate cuts could be coming, she said. MORE: Meet the 4yo Aussie homeowner with a $1m portfolio MORE: Crowd pressure home buyer to pay $550k extra Employment figures also provided some hope. 'It is important to appreciate that interest rates are only one of the variables that determines whether a mortgage holder is considered 'At Risk',' Ms Levine said. 'The largest impact on whether a borrower falls into the 'At Risk' category is related to household income – which is directly related to employment. 'The employment market has been strong over the last three years and this has provided support to household incomes, which have helped to moderate levels of mortgage stress over the last year.' PropTrack figures showed national home prices peaked in June after rising in every capital city. Rises were particularly high in Brisbane and Adelaide at a respective 8.3 per cent 9.8 per cent annually.
News.com.au
8 hours ago
- Business
- News.com.au
Bombshell way RBA interest rates relief is backfiring
Recent Reserve Bank rate cuts have been spurring home buyers to rack up larger amounts of debt – and now the pressure is boiling over, with households beginning to feel the strain. New Roy Morgan polling has revealed the proportion of households now at risk of 'mortgage stress' is level with figures reported in January – before the first of this year's two cuts were announced. About 28 per cent of mortgage holders were reported to be 'at risk' of mortgage stress in June, up from the period just after the most recent cut in May. About 1.3 million Aussies are experiencing mortgage stress, $684,000 more people than in early 2022 – before the first of 13 interest rate hikes over that year and early 2023, according to Roy Morgan. Mortgage stress was defined as households spending a disproportionate or unsustainable amount of their incomes on keeping a roof over their heads. Roy Morgan chalked up the rise in stress to larger borrowing amounts taken out by people buying homes and larger amounts outstanding on home loans generally. It's an alarming twist to the economic relief meant to come from the RBA's double whammy of cash rate cuts, first in February and then again in May. Economists said mortgage stress levels surging back to where they were in January, before any cuts were made, was concerning. The figures suggest a brief dip in repayments offered by the RBA cuts was quickly swallowed up by borrowers stretching their budgets to the limit just to get into the market — or upgrade. Bigger debts have come as households battled a lethal cocktail of other ballooning costs, including skyrocketing insurance, council rates and power bills. It will take another 0.25 per cent interest rate cut to break the cycle of rising mortgage stress, Roy Morgan noted. Roy Morgan CEO Michelle Levine said households' rising debt levels were not surprising given recent home price rises. She said the figures suggest recent cuts have only provided temporary relief for the mortgage markets as a whole. 'These results show although reducing interest rates generally does lead to lower levels of mortgage stress, this effect may only be short-term as new buyers entering the market are able to borrow more money for larger loans to get into the market, thus leading to an increase in mortgage stress,' she said. Ms Levine said the outlook for mortgage holders over coming months looked more positive. Ten successive months of falling inflation, which has left inflation within the target range of the RBA, suggested more interest rate cuts could be coming, she said. Employment figures also provided some hope. 'It is important to appreciate that interest rates are only one of the variables that determines whether a mortgage holder is considered 'At Risk',' Ms Levine said. 'The largest impact on whether a borrower falls into the 'At Risk' category is related to household income – which is directly related to employment. 'The employment market has been strong over the last three years and this has provided support to household incomes, which have helped to moderate levels of mortgage stress over the last year.' PropTrack figures showed national home prices peaked in June after rising in every capital city. Rises were particularly high in Brisbane and Adelaide at a respective 8.3 per cent 9.8 per cent annually.
Wall Street Journal
20 hours ago
- Business
- Wall Street Journal
Eurozone Consumers' Mood Improves a Little
Consumers in the eurozone are a little less gloomy as inflation stabilizes, and despite a background of global economic uncertainty, a monthly survey showed Wednesday. The European Commission's flash consumer-confidence indicator for the eurozone rose to minus 14.7 in July from minus 15.3 in June. The less pessimistic mood comes on the back of a series of interest-rate cuts by the European Central Bank since last summer, and a rate of annual price inflation that is now holding steady around the 2% mark considered optimal by the ECB.
Bloomberg
3 days ago
- Business
- Bloomberg
Economists See Slimmer Chance of More Rate Cuts in Canada This Year
Expectations for further interest rate cuts this year from the Bank of Canada are slowly evaporating. Economists at two of Canada's largest lenders, Bank of Nova Scotia and Royal Bank of Canada, now say Governor Tiff Macklem and his officials will keep their benchmark rate at 2.75% through the end of 2025.
News.com.au
5 days ago
- Business
- News.com.au
Freeze grips home sales after RBA moves leave homeowners in limbo
Mounting speculation over further interest rate cuts has spurred a winter freeze across the Sydney housing market as buyers and sellers await the outcome of the next Reserve Bank rates decision before making a move. PropTrack's June 2025 Listings Report has revealed a 13 per cent decline in new listings across Sydney over the past month. Current listings are also about 5.2 per cent lower than at the same time last year. Many of the homeowners delaying plans to sell their homes are likely to also be buyers, with upsizers and downsizers normally making up a significant share of the buyer pool. A slump in new listings has occured as total listings rise, suggesting a market where buyers have a large selection of older listings but few fresh options. It's an anomaly on the east coast when compared to other capitals like Melbourne and Brisbane, where both new and total listings have declined since last year. PropTrack economist Angus Moore said the data demonstrated that Sydney properties were spending longer on the market recently. 'The fact we're seeing a bit more stock on market despite a smaller flow of new listings reflects homes taking a little longer to sell than they were a year ago,' he said. 'Though the difference isn't large, and homes are still selling faster than they were pre-pandemic.' With a prospective cash rate cut in the future, Mr Moore said things would soon improve for sellers. 'We're expecting to see a couple more rate cuts this year,' he said. 'Coupled with the fact Sydney home prices have been consistently increasing this year after a soft period in late 2024, that's likely to support vendor confidence.' Scerri Auctions director Chris Scerri said compared to June last year, auction figures were 'a little bit down'. He added that this kind of decline was seasonal and sales would 'increase significantly' come Spring, and that future rate cuts would also provide a boost to buyer confidence, auction turnouts and bids. 'As soon as there's talk of an interest-rate cut, (loan) applications and reapplications increase,' he said. 'That just gives more confidence which means increased buyer numbers.' 'At the moment our average buyer number is about 3.5 per auction, and then of those buyers about 50-60 per cent are actually bidding.'
