Interest rates may have peaked: what it means for property

A growing number of economists say the next move on interest rates will be down after the Reserve Bank of Australia kept interest rates unchanged for a second straight month.

The predictions come as buyers and sellers gear up for the traditionally busy spring selling season, with a renewed sense of certainty expected to support activity – and prices – in the months ahead.

At its August meeting, the RBA held the cash rate steady at 4.1%, where it has sat since June, marking the longest pause since rates began rising from a record low of 0.1% in May 2022.

In announcing the decision, RBA governor Philip Lowe didn’t rule out further increases but said it would depend on how inflation and the economy evolves.

The wait-and-see approach prompted several economists to update their forecasts, with CBA and Westpac joining ANZ and AMP on the view that interest rates have now peaked.

Westpac chief economist Bill Evans says the next challenge for the outlook should now be the timing of the first rate cut.

CBA expects the first move will come much sooner, anticipating a rate cut in each quarter from March 2024 to take the cash rate back to 3.1% by the end of 2024.

While the consensus is that interest rates have peaked, NAB expects the RBA will move once more to ensure inflation remains on track to return to its 2-3% target range by mid-2025.

At 6%, inflation was still running at more than double the RBA’s target over the year to the June quarter.

Source - Re.com.au