Aussie mortgage brokers expect spending habits to be significantly transformed by forthcoming rate rises
Mortgage brokers in Australia believe that rising interest rates will impact consumer spending habits more significantly than mortgage repayments and property costs, while the majority believe the RBA will raise the cash rate in November.
A new survey of mortgage brokers from leading Australian home loan marketplace Joust asked a range of questions regarding future cash rate rises both for November and over the next 12 months, as well as where we will see the biggest flow-on effects, and how recent changes have impacted their businesses.
Off the back of inflation reaching 7.3% last week, its highest level since 1990, 100% of brokers agreed that spending habits will continue to change significantly over the coming months. The majority (75%) also believed that mortgage repayments will continue to be significantly impacted. Less brokers (12.5%) believed that the biggest changes would be seen in personal incomes and property investments, while 1 in 4 respondents suggested general property costs would see big flow-on impacts from future rate rises.
While the majority of brokers (87.5%) are predicting the RBA to raise the cash rate once again in November, there was less consensus around how high the rate will go over the next year. 50% suggested that the cash rate will rise by 4% or more over the next 12 months.
The survey also asked brokers to describe the impact of recent rate changes on their businesses, with the general sentiment unsurprisingly being that customers are more nervous and that brokers have seen a reduced number of home buyer inquiries, in favour of an increase in borrowers looking to refinance.
Joust CEO Carl Hammerschmidt said: “This month we wanted to get a sense check from our broker partners on their expectations for how the rising cash rate would impact the average consumer. Perhaps unsurprisingly given the manner in which Aussies are battling against rising living costs, spending habits for consumers was the only area that all our brokers agreed we’d continue to see big changes in the coming months.
“What’s interesting is that there are still a range of opinions on how high rates will go over the next year. We found there to be an even split of those who believe rates jump by at least 4% and those who think it won’t go up by more than than 3.5%. I wholeheartedly agree with the key sentiment coming out of the survey, with most brokers encouraging borrowers to focus on wise spending and to borrow with a bigger buffer than what a bank servicing calculator may allow. ”
