The Reserve Bank of Australia (RBA) has chosen to maintain the cash rate at its first 2024 meeting this month, likely signalling the end of the repeated and substantial monthly rate hikes for home loan borrowers that started almost two years ago. 

The RBA board’s decision to leave the cash rate steady at 4.35% was a widely anticipated move that hopefully will bring a sense of relief to variable-rate home loan borrowers. These property owners experienced significant increases in mortgage repayments throughout 2022 and 2023.

At the same time, December’s data indicates a two-year inflation-low, with the consumer price index (CPI) registering at 4.1% for the final quarter of 2023—below many economists’ prediction of 4.3%. 

Although still exceeding the RBA’s target range of 2-3% inflation, the current rate of inflation represents a notable decrease from the peak of 7.8% recorded in the December quarter of 2022.

Steve Mickenbecker, a finance expert at financial comparison website Canstar, suggests that inflation is progressing toward the target range, and barring unforeseen reversals, the RBA’s next cash rate adjustment could be a decrease.

Putting this conjecture to one side, the lingering question for variable rate borrowers revolves around when they can expect relief through rate cuts. Steve Mickenbecker speculates that a rate cut might be “at least six months away while some economists have suggested November or December for potential cash rate movements.

Craig Betalli, Senior Broker at Our Broker, says an earlier cut is not out of the question, noting that the inflation numbers affirm the toll of the RBA’s aggressive rate hikes on spending and consumer confidence. 

“If the inflation rate continues to decline in January and into the third quarter of this financial year, there may be motivation for the RBA to reduce rates before June. 

“The extent of the rate reduction remains uncertain, but a range of 0.25% to 0.35% could be plausible, providing incremental relief to mortgage holders.”

In the meantime, Craig urges borrowers to engage with their lenders directly or through finance specialists such as Our Broker to negotiate on interest rates and seek potential reductions.

That said, Craig advises borrowers to be careful about the risks when pursuing a direct approach when negotiating mortgage repayment arrangements with lenders.

“Making numerous enquiries about your lending and interest rates directly with a lender can have adverse effects on your credit score. Additionally, this approach may impact your credit file when applying for a loan or credit card in the future, as lenders may question the frequency of credit enquiries, interpreting it as a potential sign of financial difficulties.”

Craig underscores that engaging with a financial expert such as Our Broker entails working alongside someone with a comprehensive understanding of the credit process. He asserts, "We understand the intricacies of pursuing a loan and negotiating interest rate adjustment and avoiding numerous, often futile requests that could negatively impact a borrower's credit score."

If you want an obligation-free mortgage health check before Easter, contact Our Broker today at 1800 913 677.