Rates on hold
The Reserve Bank of Australia kept the cash rate target on hold today as expected at 4.35 per cent.
The Statement on Monetary Policy included a few interesting details, including for the housing market.
Housing prices have fallen -1.6 per cent from their peak according to the RBA, driven by the higher price points in Sydney and Melbourne so far, though these figures may be somewhat lagged.
The aggregate figures appear to show that the median borrower has around a year's worth of prepayment buffers - essentially funds in offset and redraw accounts - which will likely help with the smoothing of consumption for some time, even in the higher mortgage rate environment.
Housing credit growth to investors has slowed since the Budget as expected, but so too has lending to homebuyers, according to APRA data.
These figures are also likely to be lagged, and will show further falls as the LRBA lending ban kicks into gear in full, in turn reducing new housing sales and supply.
Stamp duty take has already notably dropped off a cliff in New South Wales in particular, with both New South Wales and Queensland staring down the barrel of rating agency cuts as revenues fall away.
Core inflation is expected to ease back to the target by June 2027, and indeed inflation forecasts have been revised down a little from earlier forecasts.
However, there are still some cost pressures afoot, including notably for new housing costs, with price building cost inflation in the sector rising back up to 1.8 per cent in the June 2026 quarter, and 5.3 per cent over the year.
This comes off the back of already-large price increases in new dwelling costs over the past half-decade.
There may yet be some further cost pressures for trades and materials ahead given the huge boom in approvals for data centres in Sydney and Melbourne.
A further interest rate hike in September is priced at about a 1 in 4 chance.
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In other news the NAB Survey showed business confidence falling back a little, from already very low levels, to -6 points.
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