Mortgage rates predicted to drop in November 2024
The current 4.5% mortgage interest rate will remain as such until banks potentially compete with each other, thus bringing down the interest rate.
Transcript
00:00 But we will need to face this 4.35% cash rate for some time.
00:06 Our call is that it won't be until around November next year that we start to see rates
00:12 come down.
00:13 Between now and then, we're going to have to see those mortgages stay at those higher
00:16 rates and the only change will be through competition between banks or refinancing or
00:21 getting off a fixed rate rather than from the Reserve Bank of Australia.
00:25 But of course, that's all happening.
00:27 We know that the average mortgage rate for an outstanding mortgage of all banks is only
00:33 330 basis points higher for investors and 320 basis points higher for owner-occupiers
00:39 versus the beginning of the cycle, even though the cash rate is 425 basis points higher.
00:46 So competition in the financial sector has limited the pass-through for those households.
00:50 I'm not saying that that fixes it.
00:52 Of course, mortgages are 30 to 50% more expensive than they were.
00:56 Renters are getting the hard end of the stick as well because landlords are able to pass
01:00 on those costs to renters due to low vacancy rates.
01:03 So a really big chunk of households are getting their lifestyle downgrade impacts of these
01:08 interest rate rises, but that's really what the Reserve Bank wants to see.
01:11 They want us to spend less.
01:13 They want businesses to work harder for each dollar that they get from us because then
01:18 businesses will reduce those profit margins and stop passing costs on to consumers.
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