Trump-Musk fight may help Aussie homeowners as RBA looks to cut interest rates further
The public battle between Donald Trump and Elon Musk could assist a large group of Australians who have been doing it tough.
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
The bromance break-up between Donald Trump and Elon Musk is potentially good news for Australian first-home buyers and those paying off a mortgage.
Fresh uncertainty fuelled by the battle between the world’s richest person and the world’s most powerful person, combined with weak economic data in Australia, has resulted in financial markets forecasting three more Reserve Bank interest rate cuts by December.
It comes as a new report says housing affordability in Australia has improved at its fastest rate in nine years.
IG market analyst Tony Sycamore said the Trump-Musk fight was “a bit of a wake-up call to anyone that backed Trump and his administration that you can’t take that support for granted indefinitely”.
It was adding another layer of uncertainty, he said.
“This uncertainty is casting a shadow over other relationships that got Trump into the White House and adds another layer of global uncertainty,” he said.
Mr Sycamore noted that US commentators said President Trump was jealous of Mr Musk’s much larger fortune – more than $US400bn versus $US5bn, and he understood why Mr Musk backed down by deleting some of his anti-Trump posts.
“If the most powerful man in the world is against the richest man in the world, you are probably backing the most powerful man in the world every day of the week – he has the ability to change the ground you stand on,” Mr Sycamore said.
Mr Musk was charged with a government cost-cutting drive, but that has ended in spectacular fashion after he slammed Mr Trump’s “big beautiful bill” because it would increase an already large budget deficit.
The Tesla co-founder predicted a US recession this year, which would weigh on the global economy. Mr Sycamore said that, while the heavyweight personal battle created more uncertainty, RBA rate cuts should help stimulate Australia’s economy.
The RBA has reduced rates twice this year, in February and May, and in recent weeks it has appeared more accommodating to further cuts.
AMP expects a 0.25 percentage point RBA rate cut in July, and more in August and November this year, and February 2026.
AMP deputy chief economist Diana Mousina said that, while “all of this noise around the administration and power battles is entertaining, it doesn’t send a lot of confidence about the US economy for investors”.
Ms Mousina said the RBA’s May meeting board minutes read as if events in the US were influencing its decisions, “but I think it’s actually overestimating that global impact, because when you run through the details of their forecasts it was mainly due to domestic downgrades”.
“The March quarter GDP data in Australia wasn’t impacted by trade at all, and it was bad,” she said.
Ms Mousina said low inflation data had given the RBA confidence that Australia was not experiencing an inflationary spike that could push interest rates up again.
Meanwhile, the Real Estate Institute of Australia’s Housing Affordability Report says affordability in the March quarter improved at its fastest rate since 2016, but was still down over the year.
It says rising family incomes and falling interest rates caused the improvement, with the average loan repayment down 2.9 per cent at $5323 a month.
REIA president Leanne Pilkington said affordability improved in every state and territory except the NT.
“First-home buyers remain active in the market, although numbers dipped in line with seasonal expectations,” she said.
However, AMP’s Ms Mousina said she did not think housing affordability was getting better.
“The cost of borrowing has gone down, but home prices still have kept going up,” she said.
“The more that you can borrow with a 25-basis-point rate cut is not nearly enough to offset the monthly change in the average home price.
“I think affordability is going to keep suffering because we think the housing market is going to go up by 5 or 6 per cent this year in terms of national home prices.”
More Coverage
Originally published as Trump-Musk fight may help Aussie homeowners as RBA looks to cut interest rates further
Aussie AI loyalty platform takes on Amazon
Local digital receipts platform Slyp has launched an AI-powered loyalty platform to help retailers take on the likes of Amazon and better compete online.
Your first look inside Western Sydney’s gateway to the world
It’s been a long time coming but at last the newly completed domestic and international terminal is ready and we have the pictures. Take a look inside and watch the video.