News
Wealth Pi Fortnightly Economic Snapshot
Interest Rates
The RBA lowered the official cash rate to 4.10% in February 2025, with market expectations indicating a 21% probability of another 0.25% rate cut at the next meeting on April 1, as implied by ASX 30 Day Interbank Cash Rate Futures.
RBA
RBA Rate Cut the first move since 8th November 2023.
On the 18th February 2025, the RBA cut the official cash rate from 4.35% to 4.10% in a move that signals that they believe inflation is moving to more sustainable levels. Unlike many turns in rate cycles we have seen before this move is a very gentle one, unlikely to be followed by many more aggressive ones. The market consensus places another rate cut in March at 39%.
From here we believe the RBA Board will wait and watch for a few months after each rate move in a measured way to keep a close eye on how inflation numbers play out. We believe interest rates will move lower over the year but execution on this will be slow. For all accounts the RBA forecasting department has revised up their inflation numbers slightly due to fiscal ones offs that have dampened recent numbers which supports a careful approach.
Australian Markets
Investor loans for dwellings fell by 4.5% in the December quarter 2024, marking the first decline since early 2023, while new home loans (excluding refinancing) continued to rise for the third consecutive quarter, increasing by 2.2% in number and 4.2% in value.
Global Markets
US:
In US, mortgage rates dipped slightly to 6.87% despite rising inflation, signaling a potential boost in housing demand, though home prices continue to decline, inventory is growing, and buyers remain cautious amid persistent affordability challenges.
UK:
In UK, the Bank of England has cut the base rate by 0.25% to 4.5%, boosting market sentiment and potentially lowering mortgage rates, while economists anticipate further cuts in 2025, supporting increased housing market activity and a projected 5% rise in home sales.
Property
A total of 1,802 homes are scheduled for auction across Australia’s capital cities this week, up 7.9% from last week but 13.8% lower than the same period last year, with Sydney seeing a 28.2% increase in auctions while Melbourne and Brisbane record declines.
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