RBA Prepares for Another Interest Rate Hike

The Reserve Bank of Australia (RBA) is set to meet on September 28 and 29, and market chatter suggests that another interest rate hike is likely. The RBA has been monitoring inflation closely, with Governor Michele Bullock stating that upside risks to inflation are materializing.

All four of Australia's Big Four banks have forecast a 25 basis point rate hike at the September meeting, taking the official cash rate from 4.35% to 4.60%. This would put more pressure on mortgage holders and investors, many of whom are already dealing with reduced borrowing capacities and elevated living costs.

Brokers interviewed by Australian Broker expressed mixed views on the impact of a rate hike. Some believe that it could lead to a slowdown in buyer activity, while others think that demand will remain steady but become more cautious. First-time homebuyers and highly-leveraged borrowers are expected to feel the impact most.

Jo Attard, founder and finance specialist at Heart Financial, expects another rate rise and believes that the immediate response would be caution, with buyers reassessing their borrowing capacity and affordability.