Experts expect another cash rate hike

Oksana Patron

6 February 2023

Aussie homeowners, who already struggle to repay their mortgage, should brace for a ninth consecutive cash rate hike, as 95% of experts surveyed by Finder expected another increase on Tuesday.

According to Finder RBA Cash Rate Survey, almost all panellists (95%, 42/44) believed the cash rate would increase on Tuesday, with the majority (91%) forecasting another increase of 25 basis points – bringing it to 3.35% in February.

On top of that, the panel forecast that the cash rate would eventually peak on average at 3.75%, however three in four (75%) said the RBA would hold the cash rate in March.

“With the current series of hikes having already added almost $11k to the annual cost of the average Aussie mortgage ($601,793), a ninth consecutive rate hike might prove to be the last straw for many,” Finder’s head of consumer research, Graham Cooke, said.

According to Finder’s data, one in three homeowners in Australia experienced problems with paying their mortgage in January while more than half of experts predicted that rate hikes would put additional upward pressure on rents in 2023.

The asking price of rentals increased 10% nationally in October 2022 year-on-year, according to CoreLogic data.

Finder’s survey examined 44 experts and economists on future cash rate moves and other issues relating to the state of the economy

“The forecasts from yield curve models using weekly and monthly rates as well as those from the models including quarterly inflation, inflation expectations, and labour market conditions draw a similar picture: the interest rates will keep increasing until mid-2023 reaching the level of 3.5%, with a likely range from 3.1 to 3.9%. The models of quarterly data indicate sharper increase with a higher uncertainty. The year is likely to close with the cash rate at the level of 3.7%,” one expert, Tomasz Wozniak from University of Melbourne, said.