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Finder’s RBA survey: 84% of experts say the cash rate will move by August


Experts unanimously agree a rate hike is necessary to curb inflation, but the question is when and by how much, according to a new Finder poll. 

In this month’s Finder RBA Cash Rate Survey™, 32 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy. 

One in five economists (22%, 7/32) believe the cash rate will change on Tuesday, while half (50%, 16/32) don’t expect the RBA to bump up the cash rate until June.

Almost all panellists (84%, 27/32) agree the rate will move by August.

Sarah Megginson, senior editor of money at Finder, said this was the first significant next-month rate hike prediction in seven years of running the RBA Cash Rate Survey at Finder. 

“With the vast majority of panellists expecting a rate move within the next two months, homeowners can be sure their mortgages are about to get more expensive.

“It must be noted however that this survey was conducted over the last week. Interestingly, 6 of the 7 predictions for a May cash rate increase were submitted after Wednesday’s inflation results. 

“Additionally, three of the big four banks have said they expect a rate rise on Tuesday,” Megginson said. 

Stephen Koukoulas of Market Economics predicted a rate rise in May before last Wednesday’s inflation results were announced.

Shane Oliver of AMP believes a rate hike is coming on Tuesday.

“Inflation has blown out to above 5%, full employment has been reached and it’s now only a matter of time before official wages data picks up,” Oliver said.

However some experts, including Noel Whittaker of QUT, cited the federal election as a reason the RBA may delay a rate rise.

“We all know rate increases are coming but I don't think they will do it just before the election,” Whittaker said. 

How much your monthly mortgage repayments could increase by

Cash rate Example variable home loan interest rate Monthly payment on $600,000 home loan* Increase
0.10%
(current rate)
2.1% $2,250 $0
0.50%
(up 40 basis points)
2.5% $2,370 $120
1.0%
(up 90 basis points)
3% $2,530 $280
1.5%
(up 140 basis points)
3.5% $2,700 $450
2.0%
(up 190 basis points)
4% $2,865 $615
Source: Finder
*Based on the ABS average home loan balance, on a principal and interest loan over 30 years.

The suburbs experiencing the highest mortgage stress

The number of Australians struggling to meet their living costs is continuing to climb, and reached a record high in April, according to Finder’s Consumer Sentiment Tracker. 

Almost 2 in 5 (39%) Australians – equivalent to 7.5 million people – admit to struggling to pay their rent or home loan repayments in April, up from 37% in March and 35% in February.

According to Finder analysis, homeowners in Sydney’s Darlington have the highest potential for mortgage stress, with the average home loan repayment making up 105% of the average household income.

In Victoria’s Blairgowrie (88%), and New South Wales’ Mullumbimby (85%), repayments also make up a considerable portion of the average monthly income.

Top 10 mortgage stress suburbs


Suburb Average property price Average monthly mortgage repayments Average monthly household income Ratio of repayments to income
Darlington (Sydney - NSW) $1,519,231 $5,528 $5,289 105%
Blairgowrie (Mornington Peninsula - VIC) $1,550,000 $5,640 $6,394 88%
Mullumbimby (Byron - NSW) $1,203,047 $4,377 $5,175 85%
Lorne (Surf Coast - VIC) $1,492,595 $5,431 $6,866 79%
Bangalow (Byron - NSW) $1,540,584 $5,606 $7,478 75%
Berry (Shoalhaven - NSW) $1,413,958 $5,145 $6,953 74%
Eastlakes (Botany Bay - NSW) $1,173,571 $4,270 $6,058 70%
Milton (Shoalhaven - NSW) $1,195,122 $4,349 $6,200 70%
Anglesea (Surf Coast - VIC) $1,327,282 $4,830 $7,213 67%
Queenscliff (Queenscliffe - VIC) $1,212,245 $4,411 $6,591 67%
Methodology
  • Property price data is taken from CoreLogic. Property price shown is the weighted average of house and unit prices, based on the percentage of house and unit sales in each suburb.
  • Household income data is from the 2016 Census.
  • Suburbs with a population of less than 1,000 people have been filtered out of the analysis.
  • Suburbs with less than 40 property sales within the past 12 months have been filtered out of the analysis.
  • Suburbs in the top 20% of household income have been filtered out of the analysis.
  • Mortgage repayments figures are based on a 30--year loan term and the current average owner occupier discounted variable interest rate of 3.6033%, according to the RBA. Homebuyers are assumed to pay a 20% deposit.
Megginson said mortgage stress was likely to increase again in 2022, with Australians facing multiple economic pressure points. 

“It’s a double whammy for Aussie homeowners – inflation figures out last week have confirmed that, overall, the cost of living has increased by 5.1%. 

“At the same time, we have interest rates going up much earlier than we were expecting. 

“Prices are going up on everyday items while mortgages are also getting more expensive,” Megginson said.  

Household debt, cost of living a worry for economists 

Finder's Economic Sentiment Tracker gauges experts' confidence in five key indicators: housing affordability, employment, wage growth, cost of living and household debt.

Negativity towards household debt has grown to 48%, a sharp increase from 29% the month prior. 


Megginson said increased costs were here to stay, and in fact, could continue to climb even higher as inflation goes up throughout the year.

“If you're struggling to save money or keep up with your monthly expenses, shopping around for better deals on some of your regular expenses is a really good place to start.

“Inflation may be pushing prices up, but businesses are competing harder than ever for your money.

“There are so many deals on the market on everything from energy, internet and phone bills to your mortgage so if you think you are paying too much, you’re probably right."


*Experts are not required to answer every question in the survey

Here’s what our experts had to say:

Andrew Wilson, My Housing Market: "Although the RBA has recently moderated its stance on the timing of a rate increase, it remains unclear whether it will now abandon its stated position of awaiting a consistent period of strong wages growth before acting. The official data confirming this possible outcome will not become available till late August.”

Dr Angela Jackson, Impact Economics and Policy: "Latest inflation and employment data warrants commencement of further monetary policy settings."

Malcolm Wood, Ord Minnett: "Inflation is now sustainably back in the RBA's band, the economy is strong and the labour market is tight."

David Robertson, Bendigo Bank: "The CPI data including a core inflation rate of 3.7% adds even more urgency for the RBA to lift interest rates. A May hike of 15 basis points followed by 25 bp in June taking the cash rate to 0.5 % is now more likely given this data and with unemployment trending below 4%."

Craig Emerson, Emerson Economics: "The RBA might well judge that the trimmed mean inflation rate does not warrant a cash rate at the emergency low level of 0.1 per cent."

Jonathan Chancellor, The Daily Telegraph: "The RBA has the confirmation it awaited of inflation necessitating the rise"

Shane Oliver, AMP: "Inflation has blown out to above 5%, full employment has been reached and it's now only a matter of time before official wages data picks up. Delaying further will risk a rise in inflation expectations making it harder to get inflation back down."

Stephen Halmarick, Commonwealth Bank: "Post CPI and wages data."

Nicholas Frappell, ABC Refinery: "Australian CPI figures were high but hard to say if high enough to bring tightening forward."

Brodie Haupt, WLTH: "With continued uncertainty and rising pressure from inflation, I think it is likely there will be a change to the cash rate this year at some point. Monetary policy typically lags in taking effect on the economy."

David Zammit, Mortgage Choice: "The economy is strong, with the unemployment rate sitting at a record low and while inflation is rising, it is unlikely the RBA will lift the cash rate right before the Federal Election, so I don’t expect to see a change in May. However, a compelling case is building for a move in June pending the results of the March quarter CPI and wage price index, which will be released later this month."

Cameron Kusher, REA Group: "The RBA appears to have been overrun by market expectations. They had been willing to be patient but as everyone moved their expectations to June there was little if any pushback from the RBA or any of the journalists perceived to have a line into the RBA."

Alan Oster, NAB: "Wage and price pressures growing as economy strengthens  No need for super low rates now  "

Benjamin Udy, Capital Economics: "Inflation is surging and the RBA is coming around to our view that it needs to act. We expect the Bank to wait until after the federal election is wrapped up before starting its hiking cycle in June. thereafter we think the Bank will hike rates at every meeting this year lifting the cash rate to 1.75% by the end of the year."

Mathew Tiller, LJ Hooker Group: "Inflationary pressures have continued to accelerate across the globe and Australia has not been immune, this means a rate rise is just around the corner. If the RBA doesn’t lift the cash rate in May (due in part to the upcoming Federal Election) it will more than likely do so in June."

Tim Reardon, Housing Industry Association: "This will give the RBA two more CPI readings and one more wage price index reading, and enough confidence that inflation is sustainably within its 2-3 per cent target band."

Geoffrey Harold Kingston, Macquarie University Business School: "I’m guessing the RBA will hold off until June because of share market wobbles."

Leanne Pilkington, Laing+Simmons: "It’s a close call, as inflationary pressures demand attention despite the Reserve Bank being open in its preference not to lift rates ahead of the election. Assuming a rate rise is imminent, it’s not only a question of when but by how much?"

Annette Beacher, ausbiz: "SHOULD hike by 15bp in May, but failing that SHOULD hike 40bp in June. What will they do? Who knows!"

Mark Crosby, Monash University: "It will be very clear that inflation is now baked in, and so time to move rates towards some level of normality. The aim for the cash rate should be to 1.5% by year end at a minimum."

Jason Azzopardi, Resimac: "I previously believed a November date however the case for an increase earlier is becoming increasingly compelling which coincided with the tone of RBA messaging changing recently."

Nicholas Gruen, Lateral Economics: "I have always thought the RBA would move faster than they have foreshadowed they will as calls come to restrain inflation. "

Dale Gillham, Wealth Within: "All the banks are factoring in rate rises and so I would think after the Federal election we will see an upward movement in rates. We are in a very low rate environment and a long way from what is normal and so continual rate rises over the next few years should be of no surprise. "

Saul Eslake, Corinna Economic Advisory Pty Ltd: "There's likely to be a case for raising rates at the May meeting (assuming the March quarter CPI out on Wednesday, after the deadline for completing this survey) shows 'headline' inflation above 4% and 'underlying' inflation above 3%. But the RBA seems (taking its words at face value) inclined to wait until after it has seen the March quarter WPI data, which doesn't come out until 18th May. So that points to June. I'm not sure the March quarter WPI will show a significant acceleration in wage inflation, but if the RBA isn't going to do the first increase in May, they may well end up doing 40bp in June. "

Tim Nelson, Griffith University: "Inflationary pressures are building and the RBA will seek to get ahead of these. "

Michael Yardney, Metropole Property Strategists: "The RBA seems to have changed its stance and rather than patiently waiting for wages to rise, will look to tackle rising inflation sooner rather than later."

Rich Harvey, Propertybuyer: "The RBA has changed their perspective and dialogue in the previous months board minutes.  With inflationary pressures building strong momentum, the RBA is awaiting confirmation that wages growth is actually filtering through the economy. They are likely to move 0.15% on first increase then a series of 0.25% increases over the next 12 months in line with ongoing economic data.  The era of super cheap money is over for now."

Jakob B. Madsen, University of Western Australia: "Inflation will start to become more fundamental because of inertia and low unemployment."

Stephen Koukoulas, Market Economics: "High inflation being persistent"

Christine Williams, Smarter Property Investing Pty Ltd: "The timing will depend on which party wins the Federal Election. My thoughts if Liberals will the RBA will wait until last quarter, watching the employment rate and inflation rate, if Labour wins, I feel the RBA will increase within 3 months of election."

Noel Whittaker, QUT: "We all know rate increases are coming but I don't think they will do it just before the election."

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