Another rate rise, but it's not over yet | Kanebridge News
Kanebridge News
    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,455,257 (+1.86%)       Melbourne $939,047 (+0.87%)       Brisbane $807,503 (-0.36%)       Adelaide $776,642 (+1.97%)       Perth $663,542 (+0.53%)       Hobart $725,310 (-0.13%)       Darwin $628,752 (-0.50%)       Canberra $945,068 (-0.50%)       National $937,840 (+0.95%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $708,884 (-0.36%)       Melbourne $480,103 (+0.14%)       Brisbane $446,784 (+0.58%)       Adelaide $362,663 (+2.01%)       Perth $377,189 (+0.73%)       Hobart $536,098 (+0.28%)       Darwin $355,667 (+3.76%)       Canberra $490,461 (-1.86%)       National $495,198 (+0.01%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 8,985 (-175)       Melbourne 12,700 (-109)       Brisbane 9,286 (-64)       Adelaide 2,841 (+103)       Perth 8,366 (+33)       Hobart 1,123 (+25)       Darwin 257 (-1)       Canberra 926 (-10)       National 44,484 (-198)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 7,920 (+22)       Melbourne 7,053 (-113)       Brisbane 2,062 (-26)       Adelaide 476 (-10)       Perth 2,299 (-9)       Hobart 159 (+6)       Darwin 389 (+10)       Canberra 534 (+12)       National 20,892 (-108)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $700 (+$10)       Melbourne $530 (+$5)       Brisbane $570 ($0)       Adelaide $550 ($0)       Perth $575 ($0)       Hobart $555 (-$10)       Darwin $700 ($0)       Canberra $688 (-$3)       National $616 (+$1)                    UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $695 (+$35)       Melbourne $500 ($0)       Brisbane $540 (-$10)       Adelaide $430 (+$10)       Perth $520 ($0)       Hobart $465 (-$5)       Darwin $528 (-$3)       Canberra $550 ($0)       National $539 (+$5)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,712 (+34)       Melbourne 5,560 (+64)       Brisbane 3,823 (-32)       Adelaide 1,147 (0)       Perth 1,688 (+32)       Hobart 268 (-6)       Darwin 110 (-12)       Canberra 668 (-37)       National 18,976 (+43)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 6,667 (0)       Melbourne 4,237 (+88)       Brisbane 1,265 (-39)       Adelaide 337 (-14)       Perth 696 (-12)       Hobart 126 (-2)       Darwin 184 (-15)       Canberra 534 (+8)       National 14,046 (+14)                HOUSE ANNUAL GROSS YIELDS AND TREND         Sydney 2.50% (↓)     Melbourne 2.93% (↑)      Brisbane 3.67% (↑)        Adelaide 3.68% (↓)       Perth 4.51% (↓)       Hobart 3.98% (↓)     Darwin 5.79% (↑)        Canberra 3.78% (↓)       National 3.42% (↓)            UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 5.10% (↑)      Melbourne 5.42% (↑)        Brisbane 6.28% (↓)     Adelaide 6.17% (↑)        Perth 7.17% (↓)       Hobart 4.51% (↓)       Darwin 7.71% (↓)     Canberra 5.83% (↑)      National 5.66% (↑)             HOUSE RENTAL VACANCY RATES AND TREND       Sydney 1.6% (↑)      Melbourne 1.8% (↑)      Brisbane 0.5% (↑)      Adelaide 0.5% (↑)      Perth 1.0% (↑)      Hobart 0.9% (↑)      Darwin 1.1% (↑)      Canberra 0.5% (↑)      National 1.2% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 2.3% (↑)      Melbourne 2.8% (↑)      Brisbane 1.2% (↑)      Adelaide 0.7% (↑)      Perth 1.3% (↑)      Hobart 1.4% (↑)      Darwin 1.3% (↑)      Canberra 1.3% (↑)      National 2.1% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND       Sydney 27.3 (↑)      Melbourne 27.4 (↑)        Brisbane 32.7 (↓)     Adelaide 25.3 (↑)      Perth 32.9 (↑)      Hobart 28.5 (↑)      Darwin 39.8 (↑)      Canberra 27.1 (↑)      National 30.1 (↑)             AVERAGE DAYS TO SELL UNITS AND TREND       Sydney 26.3 (↑)      Melbourne 26.4 (↑)      Brisbane 29.9 (↑)      Adelaide 24.3 (↑)        Perth 36.5 (↓)     Hobart 25.2 (↑)        Darwin 32.0 (↓)       Canberra 28.6 (↓)       Canberra 28.6 (↓)           
Share Button

Another rate rise, but it’s not over yet

The RBA is resolute in its task to bring inflation under control

By Robyn Willis
Tue, Mar 7, 2023 3:49pmGrey Clock 2 min

The cash rate has hit its highest peak since 2012 following the RBA’s decision this afternoon to raise it by a further 25 basis points.

This will raise interest rates a further 0.25 percent to 3.6 percent, as predicted by most economists and the major banks earlier today. It marks the 10th consecutive rise since May 2022 and places the cash rate at 105 basis points above the pre-COVID decade average of 2.55 percent. For borrowers with a $500,000 mortgage, that adds about $160 more each month to repayments. 

Despite concerns expressed by various sectors of the community regarding the impacts of further pressure on household incomes, the Reserve Bank’s statement cited an ongoing commitment to driving down inflation as an influence on its decision.

“The Board’s priority is to return inflation to target,” the board said. “High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. 

“The Board is seeking to return inflation to the 2–3 per cent target range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one.”

Responding to criticism from some quarters that the full effects of consecutive rate rises over the past 10 months has yet to be quantified, the board said it recognised that “monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments” and that some households would be feeling the pinch more than others.

“Some households have substantial savings buffers, but others are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living,” it said.

Indicating that further rate rises could be on the way, the board said ‘further tightening of monetary policy will be needed’.

“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.” 

The RBA is next due to meet on April 4.  

MOST POPULAR

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

Related Stories
Money
Why It’s Now Easier to Underestimate Your Expenses and Overspend
By VERONICA DAGHER 28/03/2023
Money
The wealth creation guide, no matter what your age
By Nina Hendy 27/03/2023
Money
Lionel Messi, Cristiano Ronaldo, Rihanna Reach Billionaire Status
By FANG BLOCK 24/03/2023
Why It’s Now Easier to Underestimate Your Expenses and Overspend

Many people are spending more than they think as inflation stays elevated

By VERONICA DAGHER
Tue, Mar 28, 2023 3 min

Many people have a gap between what they think they spend and what they actually spend. This gap has widened recently as the financial and psychological effects of higher prices further strain people’s budgets.

Elevated inflation has rippled through American’s wallets for more than a year now. Some have cut back, while others have increased their spending to keep up. Credit-card balances were staying relatively flat for a while, but have jumped higher recently.

In the fourth quarter of 2022, the average household’s credit-card balance was $9,990, up 9% from in the fourth quarter of 2021, according to WalletHub, a consumer-finance website. Meanwhile, the average credit-card interest rate rose to a record high of about 20% last week, according to Bankrate.

Financial advisers say the larger amount of credit-card debt while rates are higher is one indication that some Americans are spending more than they think they are. This type of spending can reduce people’s ability to pay for important items down the road, such as college for a child or even fund their own retirement. More immediately, it will put people in costlier debt.

“If people spend too much on credit, they could end up trapped in a cycle of debt,” said Courtney Alev, consumer financial advocate at Credit Karma.

Spending less isn’t always possible when everything from groceries to travel is generally more expensive. Still, people can find ways to cut back if they understand more about why they are overspending and take a closer look at their finances.

Inflation on top of inflation

The power of compounding is a boon to investors, but not to shoppers.

Money grows much faster than most people expect because interest is earned on interest, said Michael Liersch, head of Wells Fargo & Co.’s advice and planning centre. A similar concept applies to inflation: Prices rise, and if inflation remains high, prices continue to grow on top of already-inflated prices, leaving people off guard.

“People get constantly surprised that their money isn’t going as far as they thought it would,” he said.

The cost of eating out and going for drinks continues to take Dina Lyon aback. Even though the 36-year-old married mother of one is dining out and ordering in far less than she did a year ago, some prices still give her sticker shock.

“The difference between cooking at home—about $10 for nice pasta and quick sauce from canned tomatoes—versus Italian takeout of $50 is astronomical,” said Ms. Lyon, who lives in Brooklyn, N.Y.

Outdated budgets

People tend to underestimate their future spending in large part because they base their predictions on typical expenses that come to mind easily, said Abigail Sussman, a professor of marketing at the University of Chicago Booth School of Business.

She and other researchers found that when people are coming up with predictions, they tend to think about what they usually spend money on—such as groceries, rent and gas—and base their predictions primarily on these expenses. They are less likely to consider atypical expenses, such as car repairs or birthday presents, the researchers found.

This pattern is particularly problematic when inflation is high, said Prof. Sussman. When the price of the same basket of items rises, people might not account for these price increases in their future budgets, she said.

Further, times of stress cause people to be less intentional about tracking their money, said Mr. Liersch. They might also spend more than they know they can afford to soothe feelings including anxiety and depression.

According to a recent survey by Credit Karma, 39% of Americans identify as emotional spenders (defined by the study as someone who spends money to cope with emotional highs and lows.)

Take control

You have a better chance of staying under budget if you become more aware of your spending instead of sticking your head in the sand, financial advisers said.

One thing Adam Alter, a professor of marketing at New York University’s Stern School of Business, does is create a line item in his monthly budget for one-off expenses, such as an unexpected medical bill. This gives him a cushion in his budget and enables him to more fully examine how much he is spending each month, said Prof. Alter, who has studied overspending.

People might also wish to include an escalating buffer into their budgets of say, 2% to 5% a year, to account for inflation, he said.

Jay Zigmont, a financial planner in Water Valley, Miss., looks at clients’ total take-home income from the year, subtracts everything they must spend money on such as their mortgage and how much they saved. The remaining number is how much they spent on discretionary spending.

In most cases, clients are surprised they spent so much, he said.

Once people know how much they spend, Britta Koepf, a financial planner in Independence, Ohio, suggests they practice mindful spending. Before any purchase, ask yourself if you really want or need what you are buying. Frequently, the answer is yes, but sometimes waiting five seconds will prevent you from overspending, she said.

You can also practice mindfulness by delaying purchases further.

“A lot of the time, if I tell myself that I will purchase it next week, I find that I am no longer interested a week later,” she said.

MOST POPULAR

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

Clean Air

Technology that seamlessly fixes air quality will become widespread in homes by 2030, real-estate developers say. Will homebuyers care once the pandemic subsides?

0
    Your Cart
    Your cart is emptyReturn to Shop