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It was a tough Tuesday for homeowners and borrowers around the country as the Reserve Bank of Australia (RBA) announced its ninth consecutive interest rate rise.
Mark Bouris joined a panel of experts on Channel Nine’s Today show to discuss exactly what this latest rate hike means for all Australians.
RBA Justification for hikes “confusing”
The continual rate hikes have been justified by the RBA as necessary to reduce inflation.
In February’s policy update, the RBA reiterated this by stating that their “priority is to return inflation to target”.
“High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later,” said RBA Governor Philip Lowe.
“The Board is seeking to return inflation to the 2–3 per cent range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one.”
However, Mark Bouris pointed out that for everyday Australians, “There’s a lot of confusion. And to be frank with you, I think there is a loss of faith in the Reserve Bank completely.”
“They got it wrong 18 months ago, and I think they have got it wrong now.”
Bouris said one of his gripes with the RBA’s decision-making is the fact that borrowers simply don’t have any indication of when these rate hikes will cease, which makes it difficult for all Australians to make financial plans.
He said: “The RBA has never at any stage indicated where the inflection point is from where we are now with inflation at 7.8%, to where they want to get to. So they haven’t told us where inflation should be.
“Are they going to stop hiking rates when inflation hits 6.5% or 5% or 4%?”
“It is impossible to plan if you’re an Aussie family. From my point of view, this is bad policy. Because no one knows what’s going on. This is the first Reserve Bank meeting for 2023. It sets the tone for 2023.”
“They’ve jawboned into their statement yesterday that there’s going to be more rate rises, people are going to start to panic. People will stop buying real estate and homeowners are going to stop spending. This is calamitous, from my point of view.”
What can mortgage holders do?
There are steps you can take to help avoid the pain of continual rate rises and increasing monthly repayments.
If you haven’t already, now is the time to get in contact with an experienced and trusted mortgage broker. There’s never been a more important time to have someone in your corner who can work with you and your circumstances to ensure you’re getting the best deal possible on your home loan.
Be sure to speak to a Yellow Brick Road Home Loans mortgage broker about your options and get them to do the heavy lifting. They have the technology and the know-how to shop around for you and give you the guidance you need.
