INTEREST RATES – AUSTRALIA

Interest rate rises: One in four Aussie mortgage holders could face financial stress

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Original article by Sarah Sharples
News.com.au – Page: Online : 4-Oct-22

Roy Morgan research reveals that close to one in four mortgage holders would be at risk of mortgage stress if the Reserve Bank lifts interest rates by 0.5% in both October and November. It would be the equivalent of 1.1 million people, and would represent the highest number of mortgage holders classed as being at risk since July 2013; Roy Morgan defines mortgage stress as having repayments greater than between 25% and 45% of household income. Roy Morgan CEO Michele Levine says the variable that has the greatest impact on whether a borrower falls into the ‘at risk’ category is household income – which is directly related to employment. She says that if employment figures remain strong, the number of mortgage holders at risk should not reach the levels seen during the global financial crisis between 2007 and 2009, when the percentage of mortgage holders at risk peaked at 35.6% in May 2008.

CORPORATES
ROY MORGAN LIMITED, RESERVE BANK OF AUSTRALIA

October rate raise could be final straw for lower income spenders

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Original article by Emma Koehn
Brisbane Times – Page: Online : 4-Oct-22

Low-income households will come under further pressure if the Reserve Bank of Australia increases the cash rate by another 50 basis points on Tuesday. The latest quarterly consumer survey from UBS shows that low income earners have an "outright negative" financial outlook, although wealthy Australians are expected to keep spending. Australian Retailers Association CEO Paul Zahra notes that the full impact of the recent interest rate increases have yet to flow through the economy, adding that retail sales could soften in coming months.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN RETAILERS ASSOCIATION

Interest rates: Ghost of ’89 may come to haunt us

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Original article by Patrick Commins
The Australian – Page: 2 : 4-Oct-22

National Australia Bank’s chief economist Alan Oster expects the cash rate to rise by 50 basis points on Tuesday, followed by a 25 basis point increase in November. However, he warns that the nation could pay a heavy price for a "policy mistake" by the Reserve Bank of Australia’s board, noting that the central bank’s aggressive tightening of monetary policy in 1989 ultimately led to a recession and a sharp rise in the unemployment rate. Oster is not predicting a recession in Australia at this stage, but he says the worsening global economic outlook will inevitably have an impact in Australia.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA

Myer defies rates gloom, tips big Christmas

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Original article by Carrie LaFrenz
The Australian Financial Review – Page: 15 : 16-Sep-22

Department store chain Myer released its latest full-year results on 15 September, announcing an underlying net profit of $60.2 million, up 16.5 per cent. Bottom-line profit rose 5.7 per cent to $49 million, while full-year sales were up 12.5 per cent to $2.99 billion; a final dividend of $0.025 per share was declared, to be paid on 7 November. Myer CEO John King said the company was expecting strong trade over the Christmas period, although he expressed fears about the level of consumer confidence, particularly if the Reserve Bank lifts interest rates again at its October meeting.

CORPORATES
MYER HOLDINGS LIMITED – ASX MYR, RESERVE BANK OF AUSTRALIA

One in five mortgagors will struggle to pay 3pc rate rise

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Original article by Nila Sweeney
The Australian Financial Review – Page: 29 & 30 : 10-Aug-22

Comparison site Finder estimates that the average mortgage interest rate would rise to 5.85 per cent if the cash rate reaches 2.5 per cent. Finder’s Richard Whitten says recent home buyers in particular will struggle to make mortgage repayments if the cash rate continues to rise. A survey by Finder has found that one in five people with a mortgage would find it hard to make repayments if their interest rate increased by three per cent, while many would consider selling their home. SQM Research MD Louise Christopher cautions that selling in a downturn would be an added challenge for distressed home owners.

CORPORATES
FINDER.COM.AU, SQM RESEARCH PTY LTD

Higher interest rates tipped to bite

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 3-Aug-22

Reserve Bank of Australia governor Philip Lowe has reiterated that higher interest rates are necessary to return inflation to the target range of 2-3 per cent and to create a sustainable balance of demand and supply. Financial markets are now pricing in a cash rate of three per cent by December, following the RBA’s third consecutive increase of 50 basis points on Tuesday. The cash rate is now at a six-year high of 1.85 per cent, and many economists expect a rate rise of either 25 or 50 basis points in September. Meanwhile, the RBA has downgraded its economic growth forecast for both 2023 and 2024 to just 1.75 per cent, while it expects the official unemployment rate to reach four per cent by the end of 2024.

CORPORATES
RESERVE BANK OF AUSTRALIA

Red-hot jobs market to push RBA harder on rates

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Original article by Michael Roddan, Cecile Lefort, David Marin-Guzman
The Australian Financial Review – Page: 1 & 8 : 17-Jun-22

The latest labour force data has heightened expectations that the Reserve Bank of Australia will continue to aggressively tighten monetary policy. Data from the Australian Bureau of Statistics shows that the economy added about 60,000 jobs in May, well above market expectations of 25,000. The official unemployment rate was steady at 3.9 per cent, and the underemployment rate was down 0.4 percentage points to 5.7 per cent. There is now widespread consensus among economists that the RBA will increase the cash rate by 50 basis points in July, and some economists anticipate that this will be followed by 50 basis point rises in both August and September.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS

House prices going south at record rate

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Original article by Nick Lenaghan
The Australian Financial Review – Page: 29 & 32 : 16-Jun-22

Investment bank Jarden is bearish about the outlook for Australia’s housing market. The firm says house prices could fall by 15-20 per cent from peak to trough, including a decline of around five per cent by the end of 2022. Chief economist Carlos Cacho says the prospect of higher interest rates will accelerate the downturn in the housing market, and he warns that Melbourne and Sydney are likely to experience an even large decline in dwelling prices. Cacho also anticipants a sharp decline in building approvals.

CORPORATES
JARDEN AND COMPANY

Lowe prompts double jump in rate forecasts

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Original article by Alex Gluyas
The Australian Financial Review – Page: 27 : 16-Jun-22

Financial markets have now fully priced in a 50 basis point increase in the cash rate at the Reserve Bank of Australia’s monthly board meeting in July. Financial markets also expect official interests to rise to four per cent by early 2023, compared with just 0.85 per cent at present. Investment bank Goldman Sachs expects the cash rate to rise by 50 basis points in July and the following two months; it had anticipated 25 basis point rate rises in August and September prior to recent comments by RBA governor Philip Lowe regarding the outlook for inflation and interest rates.

CORPORATES
RESERVE BANK OF AUSTRALIA, GOLDMAN SACHS AUSTRALIA GROUP HOLDINGS PTY LTD

RBA opens door to 2022 rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 3-Feb-22

Reserve Bank of Australia governor Philip Lowe has signalled that official interest rates could potentially rise before the end of 2022 if the economy continues to perform well. However, he has downplayed suggestions that the cash rate may be increased four times in 2022, arguing that Australia’s inflation rate is still well below that of countries such as the US and the UK. Lowe also said that the unemployment rate could soon fall below four per cent. The Commonwealth Bank still expects the cash rate to be increased in August.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA