PEXA welcomes RBA cash rate pause

News Release
Tuesday, 19 March 2024

PEXA today welcomed the Reserve Bank of Australia’s (RBA) widely expected Monetary Policy Board decision to hold the cash rate steady at 4.35%, during its second meeting of 2024.

PEXA’s Chief Economist, Julie Toth, said today’s confirmation of an extended interest rate pause will be welcome news for current and prospective mortgage holders, who will be spared another squeeze on their household incomes to accommodate higher loan repayments. It comes as PEXA’s data reveals that property and mortgage markets have remained remarkably resilient over the past year.

“Mortgage holders and first home buyers can breathe a sigh of relief today with the decision to keep rates on hold likely to instil further confidence in an already resilient property market,” Ms Toth said.

“Australia’s housing market stabilised throughout 2023 and has remained resilient into early 2024 – in terms of pricing and sales activity, even though inflation and consumer demand cooled rapidly after the RBA’s last rate hike in November. We know from PEXA’s Property Insights Report, that settlement transaction volumes increased in each of the final months of 2023, for both residential and commercial properties across the mainland states,” Ms Toth said.

PEXA’s recent Cash Purchases Report explained some of this resilience in the face of rapidly rising rates. The Report revealed that over one quarter (28.5%) of residential property buyers in NSW, VIC and QLD were able to purchase their home or investment property without taking on a mortgage in 2023. This large group of property buyers can be less affected by changes to interest rates, lending conditions or other financial circumstances.

“While cash-buyers are a large and growing force in Australia’s property market, today’s announcement of an extended pause in interest rate changes will foster greater confidence among the vast majority of buyers who still rely on mortgages to finance their home or investment purchases,” Ms Toth said.

“Among those who already have mortgages, we are still seeing elevated refinancing activity as mortgagees seek to reduce their costs. PEXA’s Refinance Index confirms that refinancing activity has moderated since the record-breaking wave of fixed-loan mortgages that required refinancing during 2023, but it remains high by historical standards. Our Refinance Index peaked in September 2023 and has since fallen back to levels similar to April 2022 (133.7 points on 19 March 2024).

The new RBA timetable allows for only 8 opportunities per year to change the Cash Rate, instead of the previous 11 monetary policy decisions per year, with the next RBA monetary policy meeting scheduled for the first week of May, one week ahead of the Federal Budget announcement.

“We expect rates will remain stable until at least May. However, while the case to keep rates stable is looking stronger, with confirmed decelerations in headline inflation and consumer demand pressures over recent months, looking ahead, we cannot totally rule out another interest rate rise until inflation is more firmly anchored to the RBA’s 2-3% target band.

“The RBA will remain guided by movements in the CPI, as well as consumer spending behaviour, labour markets and of course, the housing market,” Ms Toth said.

For more information on PEXA research reports, visit Property Insights Reports | PEXA Group (pexa-group.com).

-ENDS-

For more information, please contact:

Danielle Tricarico – Head of Corporate Affairs, PEXA
E: Danielle.tricarico@pexa.com.au
M: 0403 688 980

Kate Prigg – Corporate Affairs Manager, PEXA
E: kate.prigg@pexa.com.au
M: 0497 595 580

About PEXA

PEXA is a world-leading ASX-listed digital property exchange platform and property insights solutions business. Since 2013, PEXA has facilitated more than 16 million property settlements through the PEXA Exchange in Australia, with 89% market reach, and in 2022 PEXA launched in the UK. The PEXA Group of companies, including: .id (Informed Decisions), Value Australia and Land Insight, delivers digital insights and property solutions that help government, financial institutions, banks and property practitioners to unlock the future value of property.