Homeowners, renters, savers: How another RBA hike will affect you

The RBA may well hike interest rates tomorrow. Here's why that matters to you.

Compilation image of RBA governor Michelle Bullock on a background of houses and a red arrow
The RBA kept the official cash rate on hold at 4.1 per cent for October. (Source: Yahoo Finance Australia)

The Reserve Bank of Australia (RBA) will meet tomorrow and reveal its cash rate decision for November. Finder analysed results from its latest monthly RBA cash rate survey to find out the sentiment in the market, and the results were surprising.

Of the 45 experts and economists surveyed, 69 per cent anticipate a rise in the cash rate next week, primarily driven by the ongoing challenge of high inflation. However, 31 per cent predict stability - pointing to a gradual decrease in inflation and the residual effects of previous rate hikes.

Also by Graham Cooke:

From mortgage holders to renters and also savers, here’s what the up-and-coming interest rate decision, and potential hike, means for you.

If you’re a mortgage holder

Another increase will be unwelcome news to struggling homeowners, who have already faced 12 rate increases in the past year and a half.

While my personal speculation leans toward the RBA possibly delaying the rate hike this month, it's important to note that they still have another opportunity to implement the increase before year-end. As Noel Whittker, an expert from QUT Business School, noted in the survey: "The Reserve Bank is between a rock and a hard place. It's anybody's guess where interest rates are going."

Meanwhile, the proposed 'Help to Buy' scheme - allowing buyers to purchase in a shared-equity scheme with a mere 2 per cent deposit - has garnered mixed reviews. While 56 per cent of the panellists caution against it, fearing it might inflate home prices, its advocates highlight its potential to assist those struggling to enter the property market.

Stella Huangfu of the University of Sydney said: “This policy definitely will increase home ownership, especially for the young generation who is trying to enter the housing market. Making housing become more affordable will also help to ease rental market pressure.”

Mala Raghavan of the University of Tasmania, on the other hand, warned: “This will only push up the house prices and will not help to solve the housing crisis.”

If you have savings

ANZ's recent move to slash its savings rate by 0.1 per cent, despite the potential for more cash rate increases, has stirred discussions among the panel. A sizable 62 per cent predict a domino effect, with other banks likely to follow suit. By the time the survey closed this week, UBank had already done so. The underlying motive? A drive to maintain profit margins.

Leanne Pilkington of Laing+Simmons didn't mince her words, stating: "It is unsurprising when banks prioritise profits over people."

The survey sketches a troubling scenario for homeowners. A staggering 91 per cent of participants believe households are delving into their savings to manage mortgage payments. With rising mortgage interest rates and the escalating cost of living. Finder’s data is in agreement, showing 35 per cent of households report they are struggling to pay their mortgage as of October 2023.

If you’re a renter

The cash rate doesn’t only affect homeowners, however. With 87 per cent of experts suggesting the peak for average rental prices is yet to come, renters might need to brace for potential price surges.

Whatever the RBA decides, homeowners and renters will continue to struggle. High savings rates were the one benefit available to Aussies - so let’s hope the rest of the banks don’t follow the starters out of the block, and begin cutting savings rates.

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