Interest rates could fall by the end of the year, major lender predicts
There’s good news on the horizon for stretched mortgage holders ahead of April RBA meeting
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Mortgage payments could ease as soon as the end of 2023, according to predictions by Australia’s largest mortgage holder.
Economists at the Commonwealth Bank expect rates to peak at 3.85 percent (0.25 percent above current levels) in May before easing off towards the end of the year. This comes ahead of tomorrow’s meeting of the Reserve Bank of Australia board, which is widely tipped to keep rates on hold for the first time in 10 months.
While the other three major banks – Westpac, ANZ and NAB – are all suggesting rates will not begin to fall until 2024, the CBA and NAB have made the most accurate predictions over the past six months.
Westpac predicts interest rates will peak at 3.85 percent in May, while NAB and ANZ expect two more possible rate rises in May and June, bringing interest rates to a peak of 4.1 percent.
The RBA has been using rises in the cash rate to drive down inflation, which has fallen from a peak of 8.4 percent in December 2022 to 6.8 percent in February, further strengthening the possibility of a pause.
Property data provider CoreLogic has just released its Home Value Index, revealing national home values increased by 0.6 percent in March, the first month-on-month rise since April 2022. Research director at CoreLogic, Tim Lawless, said low stock levels, tight rental conditions and greater demand from overseas migration were the most likely causes.
“Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upwards pressure on home prices,” Mr Lawless said.
“Advertised supply has been below average since September last year, with capital city listing numbers ending March almost -20 percent below the previous five-year average. Purchasing activity has also fallen but not as much as available supply; capital city sales activity was estimated to be roughly -7 percent below the previous five-year average through the March quarter.
“With rental markets this tight, it’s likely we are seeing some spillover from renting into purchasing, although, with mortgage rates so high, not everyone who wants to buy will be able to qualify for a loan. Similarly, with net overseas migration at record levels and rising, there is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast track a home purchase simply because they can’t find rental accommodation.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Villa prices saw particularly strong growth, with capital values increasing by 33.4 percent year-on-year
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Dubai’s real estate market showed strong performance in the second quarter of 2024, with notable increases across the residential, office, and retail sectors, according to a new ValuStrat real estate report for Q2 2024.
Villa prices experienced particularly strong growth, with capital values rising by 33.4 percent year-on-year.
Haider Tuaima, Director and Head of Real Estate Research at ValuStrat said: “The Dubai real estate market has shown impressive growth and resilience in recent months. The ValuStrat Price Index for Residential Capital Values increased by 6.4 percent quarterly and 28.2 percent annually, reaching 178.2 points.
“Despite severe flooding caused by record rainfalls in April, the quick and effective response from developers and authorities helped to control the damage, ensuring that market activity and property valuations remained robust in the subsequent months.”
The office sector also performed well, with the VPI for office capital values surging by 31.7 percent annually and 9.4 percent quarterly, reaching 212.5 points—the highest quarterly increase in a decade.
In the retail sector, Emaar Properties reported 98 percent occupancy in their prime mall assets, while overall mall occupancy stood at 96 percent during the first quarter of 2024. The hospitality sector also saw growth, with total international guests reaching 8.12 million as of May 2024, a 9.9 percent increase compared to the same period last year. Hotel occupancy reached 81 percent, rising by 1.4 percent year-on-year.
Despite these positive indicators, Tuaima added, “The decline in transaction volumes calls for a closer examination of market dynamics as stakeholders navigate this evolving landscape.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
