RBA interest rates December: Bank expected to pause cash rate as Aussies head into Christmas spending

Australian homeowners are bracing as the Reserve Bank (RBA) is set to make its final cash rate decision for the year, which could lump them with more interest rates pain.

Many experts think the rate will be paused when the RBA board convenes at 2.30pm AEDT on Tuesday.

It follows last month’s decision, which saw the RBA increase the cash rate to 4.35 per cent in a shock to Australian households — the first rise in four months.

That’s a far cry from the historic pandemic low of 0.1 per cent. In the following two years, the rate has skyrocketed by 425 basis points.

The rate is now the highest level it’s been since 2011.

And Aussies are feeling the pain, with new data finding that the amount of ‘liar loans’ being taken out has increased three fold since interest rates started rising.

Australians are feeling the pinch after two years of interest rate increases.

Last month, news.com.au reported new research from Digital Financial Analytics had found that more than two million Australian households are spending more than they make each month.

MyState Bank released research last month that found more than two in five (43 per cent) mortgage holders have looked for a better home loan deal in the past six months.

Now financial company Fortiro, which launched last year to create fraud detection software, says that liar loans are also significantly on the rise.

A liar loan is where mortgagees omit certain financial information and magnify or play down other information to obtain a bank loan.

This could be lying about how much your expenditure is, or not mentioning you are about to become parents, to secure the much coveted bank loan.

Fortiro’s cofounder Sean Quagliani told the ABC that liar loans had increased three times since May last year when interest rates started going up.

“We see other examples of people removing transactions from their bank statements to only show that they might have no kids, but they have kids. People can be very creative,” he said.

Fortiro was contacted for comment.

Last year, news.com.au reported that more than half of Aussies who took out a new home loan with one of the major banks lied about their circumstances on the advice of their banker to make sure their loan was approved.

It found that 55 per cent of respondents who had taken a mortgage with ANZ in the six months to December 2021 had made false representations on their application, investment bank UBS’ survey showed.

In regards to the upcoming RBA board meeting, the prognosis is looking good, with new consumer price index (CPI) figures finding that inflation is well below its peak compared to a year ago.

The inflation rate is sitting at 4.9 per cent, below what most economists were expecting.

In December last year, the inflation rate peaked at 8.4 per cent, and has been brought down since then with multiple back-to-back hikes.

In good news for homeowners AMP’s deputy chief economist Diana Mousina predicts the cash rate will be put on hold at the afternoon meeting.

“Our base case is for the cash rate to remain unchanged at 4.35 per cent,” she said in an emailed newsletter.

There are a number of reasons it’s unlikely Australia’s central bank will pull the trigger on another rate hike, including retail sales being “softer” since last month, even despite the Black Friday sales, according to Ms Mousina.

She also noted that home prices have started falling in Sydney and Melbourne over the past week, and at the same time auction clearance rates are also slowing down.

The inflation rate is “below economist and our own expectations of 5.2 per cent”.

It’s also dropped considerably even from last month, when inflation stood at 5.6 per cent.

She expects rate cuts to be brought in from mid next year in what would be welcome relief for Aussie mortgage holders.

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