After a rapid rise in inflation and a 3% increase in the RBA cash rate within 8 months during 2022 it is now clear that inflation has peaked and will be easing over 2023. Our current house view is for the RBA to raise rates by 0.25% in February and then maybe one more 0.25% increase before pausing giving a final cash rate between 3.35% – 3.6%. So in effect inflation was a 2022 problem. 2023 is now a fear of recession issue, only time will tell, but Commbank expect interest rates to start dropping in late 2023 and into 2024 up to 1% depending on how aggressive the RBA are in 2023. There will be a time lag to confirm the data of inflation dropping in the first half of 2023, so there will likely still be a little further to go from the RBA. The other issue that will affect households is the ’fixed rate cliff’ previously mentioned and now widely covered in the press, with over 800,000 mortgage holders in Australia rolling off fixed rates of around 2% into a 6% or more variable rate in the next 6 months. This will cause a further slowdown in the household spending and economy. We have been recommending preparing for this change in home loan payments for a while for those affected and Total Choice can assist clients to get a better deal on their home loan refinancing to a much lower rate with special offers and cashback deals common. Other ways to look at reducing the impact of a higher interest rate is to consolidate debts into one low rate payment, restructuring the loan into a 30 years term, and having a hard look at personal spending, and maybe even a monthly budget. Overall our house view is that the economy will slow but not fall into recession and in WA with the mining industry powering ahead the economy will remain strong.
Total Choice Home Loans are happy to assist where we can with a free consultation and financial health check with access to experienced advisers to make sure you are on track with the best deal possible for you. Contact us today to start the conversation.

February 3, 2023by jonathan