Compare the Market economics director David Koch has warned of dire fallout for Aussies if the RBA drags its feet. Picture: Brett Hartwig
Prominent analyst David Koch has warned of shock fallout tied to the Reserve Bank’s rate cut gamble come Tuesday.
Mr Koch, who is comparison firm Compare the Market’s economic director, said their research had found nearly half of Aussies were now reporting mental health struggles due to financial stress – with not just homes now on the line but also health, sleep and relationships.
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The RBA has been given the “green light” to cut rates on Tuesday off inflation figures. Picture: NewsWire / Gaye Gerard
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Mr Koch said the stakes were high, with pressure on the RBA to cut rates given it has the green light off signs of inflation easing.
“For many, it feels like an uphill battle to pay rent, bills and groceries, afford to socialise, and try to have savings for a home deposit when almost everything is climbing up.”
A recent study by Compare the Market found 48.7 per cent of Aussies were experiencing heightened anxiety or depression because of financial pressures, with a shocking 72pc of Gen Z respondents affected, followed by Millennials and Gen X.
One in 5 said they were experiencing anxiety or depression for the first time ever, with a third losing sleep over finances, and half of relationships under strain – from socialising less to marital tensions.
A cut could slash a much needed $105 off monthly repayments for an average $660,000 loan – keeping an extra $1,260 a year in the homeowner’s pocket – but Aussies have bigger issues at hand.
Findings of the Compare the Market survey.
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“When rates started to rise back in 2022, the hikes came through thick and fast but I think it’s going to take a lot longer to reverse that growth,” Mr Koch feared.
“The Reserve Bank has taken a watch and wait position for the past few years and I don’t think they are ready to hit the gas just yet.”
“There’s a chance they might deliver some relief at the next board meeting, and my take is that they probably should take the ‘green light’ – we’ve made good progress on inflation, after all.”
“The May monthly Consumer Price Index was released on Wednesday, and the Reserve Bank would have loved it … all the key inflation measures slowed, and they slowed more than expected.”
“The latest retail sales figures show household budgets remain tight with consumers keeping a tight rein on spending which is impacting retailers and hospitality businesses.”
“But despite all of these positive signs, anything could happen. There’s still a possibility the RBA will disappoint homeowners by remaining parked while weighing up whether to take off some more pressure later in the year.”
RBA Governor Michele Bullock has been playing it cool when it comes to rates discussions. Picture: NewsWire / Nikki Short
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Mr Koch said if the RBA fails to deliver relief on Tuesday, homeowners could deliver their own rate cut by seeking out a better deal.
“There can be a 0.5pc difference between cheapest advertised rates on Compare the Market’s home loans panel so you can effectively create your own rate cut by shopping around.”
“And that’s just looking at rates for new customers, which we know are often much more enticing than the rates available to older customers who have not refinanced in a number of years.”
“If you’ve paid down your loan, and your property has increased in value, chances are you’ve improved your position to negotiate even better rates.”
“Remember – if you have a good track record, a solid credit rating, and consistently make repayments, the banks want your business.”
“It only takes a few minutes to run a quick comparison and look for a better rate. When switching could save you thousands over the life of your loan, you really can’t afford not to check.”
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