What Did Michele Bullock Say About Interest Rates This Week?
Speaking at Parliament House in Canberra on Friday, Governor Michele Bullock said “some of these upside risks to inflation appear to be materialising,” even as economic growth slows Australian Broker. Asked whether the current 4.35% cash rate is restrictive enough to return inflation to target, she said: “It may be that it is not, and that is really where we are at the moment.”
Bullock pointed to the Middle East conflict, saying oil and related prices “have increased sharply again and will add directly to inflation,” and to the global boom in artificial intelligence investment, which is lifting demand in key supply-chain economies. Futures markets priced a 93% probability of a rate rise at the 28 to 29 September meeting by the end of the day, up from 54% at the start of the month.
Why Are Fixed Home Loan Rates Rising Before the RBA Decides?
NAB lifted its fixed rates by 0.15 percentage points across one to five-year terms this week, taking its one-year rate from 6.44% to 6.59%, while ANZ raised its two-year fixed rate by 0.20 percentage points to 6.49% Australian Broker. ING raised fixed rates by 0.20 percentage points on 16 September, and Macquarie made a similar move the week before, leaving both with lowest fixed rates of 6.39%. Further increases from other lenders have already been announced for next week.
Fixed rates are priced off wholesale funding costs and market expectations for the cash rate over the fixed term, so they tend to move ahead of the RBA. Fixing remains a minority choice. One major bank reported only 7% of its new lending went to fixed rate products in the six months to June, and most lenders’ lowest advertised rates are variable.
Is it too late to lock in a fixed rate before the RBA decision?
Fixed rates are set by each lender and can change at any time, so the rate on offer when you apply is not guaranteed until the loan settles. Some lenders offer a rate lock for a fee, which holds the fixed rate quoted at application for a set period. Whether fixing suits you depends on how much you value repayment certainty against the flexibility of a variable loan, and the comparison is worth running with current rates from several lenders.
What Does APRA’s Latest Data Say About Borrower Stress?
APRA’s June quarter figures show 90-day mortgage arrears rose for a second straight quarter to 1.01% of all home loans, or $25.9 billion, above the 0.93% average since 2019 Australian Broker. Loans 30 to 89 days past due also rose to 0.54%. Offset balances fell $8.6 billion over the quarter to $340.5 billion, the largest quarterly drop on record in dollar terms, as households drew on savings.
Lending with deposits of 5% or less reached a record 4.31% of new owner-occupier loans, reflecting the uncapped Home Guarantee Scheme. Interest-only loans rose to 24% of new lending from 21% a year earlier, and $11.6 billion of new loans, or 5.8%, were approved as exceptions to standard serviceability policy for refinancing borrowers, a record. That exception pathway lets some borrowers switch to a cheaper loan even if they would not pass a full serviceability test today.
How Sharply Has Home Loan Demand Fallen?
Equifax’s August data showed mortgage commitments 14.1% lower than a year earlier, with first home buyer lending down 20.1%, the steepest annual fall since 2022 Australian Broker. New South Wales and Queensland first home buyer demand both fell around 22%. Equifax chief solution officer Kevin James said the market is “adjusting to a sustained higher interest rate environment.”
Are Auction Results Improving Into Spring?
The combined capital city preliminary clearance rate rose to 58.5% last weekend, the strongest result in 19 weeks, across 1,594 auctions Cotality. Melbourne led at 63.3%, a 24-week high, and Sydney reached 59.6%. Brisbane improved to 41.6% but remains almost 28 percentage points below the same time last year. Volumes were still 33.6% lower than a year earlier as more vendors chose private sale.
Resale results remain strong despite the downturn. Cotality’s Pain and Gain report found 95.4% of resales in the June quarter made a nominal gain, with a median profit of $371,000 Australian Broker. Units were the weak spot, with 20.8% of Melbourne unit resales selling at a loss.
Key Takeaways
- •Governor Michele Bullock said the 4.35% cash rate may not be restrictive enough, and markets now price a 93% chance of a September rise.
- •Nine lenders, including NAB and ANZ, lifted fixed rates in the first half of September ahead of the RBA decision.
- •Mortgage arrears of 90 days or more rose to 1.01% in the June quarter, and offset balances recorded their largest quarterly fall.
- •Loans with deposits of 5% or less reached a record 4.31% of new owner-occupier lending.
- •Mortgage commitments were 14.1% lower in August than a year earlier, with first home buyer lending down 20.1%.
- •The combined clearance rate rose to 58.5%, a 19-week high, led by Melbourne at 63.3%.