Majority of experts expect another cash rate in March

Almost all experts and economists (93%), surveyed by the Finder RBA Cash Rate Survey, were confident that the cash rate will rise in March, with the majority (86%) forecasting another increase of 25 basis points which will bring it to 3.60% in March.

However, some experts believed that the rate rise cycle was nearing to its end and, beyond March, more than half of experts expected the Reserve Bank of Australia (RBA) would hold the cash rate in April.

According to Finder, the rate increases had already added around $12,000 per year to the average 30-year mortgage, forcing lender to come up with creative ways to keep customers.

“In some cases, lenders are offering up to 100 basis point discounts to prevent existing customers from switching,” Graham Cooke, head of consumer research at Finder, said.

Finder’s Consumer Sentiment Tracker showed that 52% of Australians were already  feeling financial stress due to the increased costs while 36% of Aussie homeowners said they struggled to pay their mortgage in February.

At the same time, experts believed that the RBA needed a reform and should release more details of the board’s decision-making and do more explanatory announcements.

According to Tim Reardon from Housing Industry Association (HIA), “there was a lack of clarity of why they are raising rates so fast, and so far, despite the known risks of lags.”

Also, almost two in three experts believed the government should do more to educate households on the benefits of refinancing their home loan with competing lenders.

The research by Finder found that that 13% of Aussie homeowners were late with at least one mortgage repayment over the past six months.

Following this, 2.6 million people were forced to find a more affordable property as the cost of living bites and the survey of 1,054 Australians found 5% were selling their property for a cheaper one to reduce their mortgage.

Stella Huangfu, University of Sydney (Hold) said: “After nine consecutive cash rate increases, it is time for the RBA to wait and see before they take any further actions. There is strong evidence that the economy has been slowing down already. Unemployment rate starts picking up.”