Extraordinary news for Aussie homeowners amid tariff chaos

It’s been a rough old time for Aussies with mortgages. Now, Donald Trump’s tariffs have flipped everything on its head.

Homeowners could have their mortgage repayments slashed by $6,000 a year if a global recession is triggered by Donald Trump’s trade war chaos — including a double rate cut in May alone.

As the fallout from the US President’s new trade war engulfs stock markets worldwide, there are fresh predictions of a US recession and rapid interest rate cuts.

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Around $100 billion was wiped off the value of Australian shares on Monday amid an escalating global trade war that now involves China.

Four rate cuts in next 12 months

Despite fears of a US recession, the economic fallout could have a silver lining for Aussie homeowners slashing up to $400 a month from the average mortgage over the next year.

The ANZ is now forecasting four 0.25 per cent interest rate cuts that could save homeowners with a $600,000 loan around $76 to $156 per month depending on loan size.

A variable rate borrower with a $500,000 home loan could see their monthly repayments drop by around $76, while a borrower with a $1 million loan could see a reduction of $153.

For families with a larger $1 million loan size the savings could be worth $9,000 a year.

ANZ chief economist Richard Yetsenga said he was not ruling out a 50 basis point cut – a double rate cut – in May.

RBA Governor Michele Bullock. More than $85 billion was lost in Australian shares, as concerns over a US recession and trade war with China grow. Picture: NewsWire / Nikki Short

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“We now expect the RBA to ease in May, July and August – 25 basis points at each meeting,’’ he said.

“This would see the cash rate at 3.35 per cent in August. We do not rule out a 50bp cut in May if sentiment sours and the global growth outlook deteriorates sufficiently.

“The tariffs are disproportionately stiffer for Asia. The impact on mainland China’s economy will be limited. Malaysia, Thailand and Vietnam will be more vulnerable. US tariffs can significantly disrupt India’s exports.

“We expect Asian currencies to bear the brunt of the adjustment to the announced tariffs.

The Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points in February, saving Australian homeowners with variable interest rate mortgages around $100 to $150 per month, potentially amounting to $1,200 or more annually.

Next RBA meeting could deliver double rate cut

In a stunning prediction, Treasurer Jim Chalmers said the dive in the value of the Australian dollar – currently about 60 cents for $US1 – hinted at “around four interest rate cuts in Australia this calendar year”.

And he’s predicted there could be a double rate cut as early as next month.

“The next Reserve Bank interest rate cut in May might be as big as 50 basis points,” he said.

“Forecasting is difficult enough in more stable times, but especially so in uncertain times.

“Clearly a series of decisions are still to be taken around the world when it comes to how countries may or may not retaliate to the decisions taken and announced by President Donald Trump in the last week or so.

“So, there is an element of uncertainty around the modelling and there’s an element of uncertainty on the economic impacts more broadly.”

Releasing Treasury’s third updated forecasts on the impacts of the tariffs, he warned now was not the time to change the government.

“Australia is better placed and better prepared than our peers,” he said. “This would be the worst time to risk a change of government, to a Coalition government, which would make wages lower, taxes higher, and who has secret cuts to pay for nuclear reactors.”

“We expect the economy to grow in welcoming and encouraging ways, but the risks are obvious and substantial and they’re laid out in the document too,” he said.

reassurer Jim Chalmers predicts a potential double rate cut in May and up to four cuts within the year due to a stock market plunge linked to global trade tensions. Photo by Gaye Gerard / NewsWire

Baby boomers could be forced to delay retirement

Fears have emerged that the stock market plunge could force baby boomers to delay their retirement.

Treasurer Jim Chalmers said he wanted to assure people that in a world of volatility and uncertainty, Australia is better placed and better prepared than our peers.

“Everyone with a super fund, everyone with shares, I think probably every Australian, is seeing what’s happening on global share markets and in our own share market with a degree of trepidation about all of this uncertainty,” he said.

“One of the big pressures on the budget that we released not that long ago was these escalating trade tensions, which do cast a dark shadow over the global economy and we won’t be immune from that. But we are better placed, we are better prepared, and Australians should take comfort from that.”

“So yes, we are concerned, and we’ll continue to engage. I’m concerned about the impact in Asia. If you look at the impact of some of the tariffs on Asia, some of them were quite high.”

More than $85 billion was lost in Australian shares, as concerns over a US recession and trade war with China grow. Photo by Gaye Gerard / NewsWire

Coalition demands daily briefings

The Coalition is now demanding daily briefings from the Treasury over the unfolding crisis, accusing the Treasurer of breaching caretaker provisions.

The latest skirmish follows the release of updated Treasury modelling of the impact of tariffs and financial market turmoil on the Australian economy.

The Coalition says it wasn’t briefed and has now fired off a letter of complaint.

“Whichever party takes government after this election it is important they be prepared to respond to the potential impacts of a US recession and domestic sell off.’’ Opposition treasury spokesman Angus Taylor writes in a letter to the Treasury.

“The Coalition are seeking daily briefings on the unfolding market developments and their implications for the Australian and global economy.

“Attending these briefings would be myself, Shadow Finance Minister Jane Hume, and at times the Leader of the Opposition Peter Dutton, and up to two representatives from our offices.”

“I just want to point out that our country is going into $1.2 trillion worth of debt,” Mr Dutton said on Monday.

“We may have a global recession.

“People are going to see the value of their superannuation funds really dramatically decrease if that happens.”

“Labor can’t manage money, they can’t manage the economy, which is why they always tax,” Mr Dutton said.

“Our policies are about helping Australians. I want to improve the living standards of every Australian. Over the last three years, people have gone backwards”

Mr Dutton said there had been “a household recession in this country.”

“Families are $50,000 worse off. So, we have to be responsible in the way in which we manage the economy,” he said.

“If we are to face a recession in the United States, you don’t want a Labor-Greens government in charge in Canberra. That will be a disaster for your retirement plans.”