Rate Rises And Valuations
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It's the Real Estate Podcast brought to you by ANZ Home Loans for financial well-beings. And welcome to another episode of the Real Estate Podcast available on iHeartRadio every morning and also on Spotify and Apple and wherever you get your podcasts from. Well, here we are at the start of a fresh week and it is a Tuesday. So we've gotten rid of the Monday morning blues, the 27th day for September for 2022. And coming up, we are talking to Commonwealth Bank Chief Economist Stephen Halmaric about the rate rises. It's an interview that we did a few months back. which we thought was relevant to replay given the fact that we are heading towards the end of the month, just three more days after today, which means the 1st of October is going to be here on Saturday morning.
Anna Porter about valuations which is a pivotal piece of your due diligence that you can't cheat on and more than ever the valuation is so critical, it is so important and we also spoke to Anna a few months back but the information if you missed it first time round is just so important and so relevant. Hey if you're celebrating your birthday for today the 27th of September have a fantastic Tuesday Avril Lavigne, the singer, she is turning 37. Gwyneth Paltrow, the actor, is turning 49 today. And somebody who would have been celebrating his birthday but we lost him earlier this year is Meatloaf. It's your weekday real estate breakfast with news, interviews and predictions every morning on The Real Estate Podcast.
It's the main centre forecast with PRD, selling smarter every day. All right, let's have a look at your weather around Australia on this Tuesday morning. First, we go to Sydney, expecting showers and the wet stuff. Possibly a storm in the mix. A high of 22 degrees in Melbourne today. 17 is your forecast high. Also expect the rain. Showers to increase in Brisbane. The temperature's good with 28. And in Perth, expecting blue skies with sunshine. And you're high in Perth of 25 degrees. Informing you every morning from 6.30. Seven days a week on The Real Estate Breakfast. I'm wondering, has there been more of a busier time right now for economists around Australia jostling for position with trying to predict an unpredictable world in the middle of what is probably a volatile set of circumstances?
Well, I've been a financial market economist for 36 years, so I've seen a few cycles over the years, and there's definitely been some times where it's been much busier than others, and this is certainly one of them. The big fixed rate home loan expiry schedule is for next year. It's getting closer and closer, Stephen, and I presume that factors into your thinking for 25% instead of 50 basis points? The big mortgage refinancing challenge that is coming in 2023 is really the reason why we think the Reserve Bank won't need to increase the cash rate to 2.5% or indeed the 3.5% that's priced into markets. Many Australian households will continue to tighten through 2023 without the Reserve Bank raising the cash rate any further because there's going to be a pretty large share of the Australian housing market or those with mortgages having to refinance off those super low fixed rates that they were able to get in late 2020, early 2021 and refinance at what's now going to be considerably higher fixed rate or variable rates through 2023.
What insights does Stephen Halmarick share about current rate rises?
If next month is another 50 basis points, even with people ahead of their repayments, not all are in that situation. It's going to get pretty tricky to balance the household budgets, right? Yeah, that's exactly right. So there'll be a large number of Australians with a mortgage who will now have to be increasing their monthly repayments to service their home loan, either now or in the months ahead as interest rates continue to rise further. And as I mentioned, if you're spending more money servicing your mortgage, then you've got less money on everything else, particularly in an environment where real wages growth is negative. That is, inflation is higher than wages growth.
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