Home owners relieved at RBA rate respite … for now

The first pause in interest rate rises in 10 months might not mark the end of the rate cycle, the RBA warns homeowners

Pleased home owners Vince and Vanessa Polimeni with their children Luca, 5, and Mia, 7, at their home in Harrington Park, in Sydney’s southwest. Picture: Jane Dempster

Homeowners will have their first break from rate rises in almost a year but now the question is how long will the reprieve last.

The move on Tuesday by the Reserve Bank to hold the cash rate at 3.6 per cent will give homeowners, who have been dealt a more than $1000 a month increase on the average mortgage, a break after 10 consecutive rate rises in the past year.

Sydney homeowner Vanessa Polimeni believes the pause is a sign to many that “it will be OK”.

“I think it is going to be a big ­relief and offer some respite to a lot of people,” she said.

“Everyone has been waiting for that light at the end of the tunnel.”

The publicist and her landscaper husband Vince, who live in southwest Sydney, are yet to feel the full extent of the increases, with part of their mortgage fixed to pandemic-low rates. They have been mindful of their household budget and are steeling themselves for when their agreement expires mid-year.

“I’m a spreadsheet lady, so I’m keeping track of our money and am trying to gauge what an increase will mean for us.

“I am factoring that in now,” Ms Polimeni said.

The RBA was quick to acknowledge “some further tightening of monetary policy may well be needed” as it continues to try to wrangle inflation.

National Australia Bank anticipates one more rise of 25 basis points to round out the cycle, with the bank’s homeownership executive, Andy Kerr, advising homeowners not to get complacent.

“While this might feel like a great time to relax, it’s an even better time to take advantage of this opportunity and get ahead,” Mr Kerr said. “Some of the best ways Australians can take advantage of this rate pause is to consider putting away the extra amount they’ll save into an offset account, giving you ready access to those funds but helping you reduce your interest and pay off your home loan sooner.”

While homeowners are getting relief, group chief executive of national real estate firm The Agency Geoff Lucas is cautious the pause right now may send the wrong message.

“I am concerned that the RBA’s inaction will give some consumers false hopes,” he said.

“(The recent economic) data is symptomatic of consumers thinking that things are better than what they are.”

Property prices rose in Sydney and Melbourne in March, buoyed significantly by fewer properties being advertised.

The interest rate pause could be a sign that potential sellers needed to list their homes, said Ray White managing director Dan White.

“This could be the icing on top for the vendors deciding whether to come to market,” he said.

“This is a window here where there is probably more confidence in the outlook than there has been for some time, so now’s a good time to present my property.”