Or, at least, take the froth off the top. Chris Joye with the note:
- RBA TFF expiry in June lift fixed-rate mortgage rates.
- Low fixed rates were 40% of all new borrowing.
- Banks will need to refinance $150-350bn of RBA funding at higher market rates.
- Housing to remain strong for years.
Quite right, though I suspect the impact might be a little more than CJ reckons on. 100bps on top of your mortgage is not much unless you’ve borrowed to the hilt at 200bps. Then it’s a 50% hike to your repayments and one hell of an income shock.
A lot of folks already with mortgages will have rolled into irresistible fixed terms over the past year as well. As they roll off, repayments will jump higher. This is locked-in progressive tightening for housing and consumption for several years to come.
In my wider base case scenario of Australia being shocked by crashing terms of trade, fiscal tightening, the ongoing China trade war, plus the end of catch-up growth in 2022, you can forget about rate hikes.
The main question is, will APRA be able to tighten at all, or will house prices be used to kick the can again?