Finance
Borrowers brace for more pain as housing market sputters: ‘Hold the line’
The Reserve Bank of Australia is facing an incredibly difficult call. The Board meets next week amid continued uncertainty over the war in Iran, and a week out from a Federal Budget expected to contain some big changes. Against that backdrop, it is expected to slug mortgage holders and businesses with a hike in the official cash rate.
But borrowers could – and should – be spared another blow, according to some prognosticators going against the grain. As house prices in major cities are rolling over, certain economic commentators think the RBA should stand pat.
A hike would be the third in a row, but the second since surging fuel prices took hold.
“Because that interest rate increase — or the equivalent — has already come through in higher petrol prices, I reckon they might hold the line,” said David Koch.
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The Economic Director at Compare the Market, and regular Yahoo Finance contributor, believes the bank could wait for at least some of the dust to settle and see what’s in the Federal Budget on May 12.
“They’ll be thinking about whether oil prices will stay high for longer, because if the Middle East crisis resolves itself, oil prices will drop significantly — and that would take a big chunk out of the inflation rate,” he said.
He also pointed to deteriorating conditions in the economy and historically glum consumer sentiment as factors that could reduce demand that caused inflation to tick back up this year in Australia’s productivity constrained economy.
“Consumer confidence has plunged and business confidence has fallen to almost record lows. Consumers cutting their spending is bad for the economy because small businesses start to suffer.
“And bosses not having confidence is bad for the economy too, because they won’t invest and they won’t hire people. So the Reserve Bank doesn’t want to crush consumers and businesses with another interest rate increase,” he said.
The ANZAC Day weekend brought another soft result in auction clearance rates in the country’s biggest housing markets (with Adelaide being a notable exception). In Sydney, auction clearance rates on Saturday were 49 per cent (compared to 63 per cent a year ago) and in Melbourne was 56 per cent (down from 61 per cent the same time last year), according to Domain.
Economist and former advisor to the Gillard government, Stephen Koukoulas, also believes the right move is not to hike, and says a softening housing market could play a part in a surprise decision to hold.
Today’s installment of campaign-related news items from across the country.
* When it comes to campaign finance laws, both parties’ campaign committees have faced restrictions on how much money they could spend in coordination with candidates’ campaigns. Those limits are now effectively gone.
As MS NOW’s Jordan Rubin explained, “The Supreme Court’s GOP-appointed majority ruled for Republicans in their campaign finance challenge to restrictions on political parties spending on ads with input from the party’s candidate.”
A Punchbowl News report added that the ruling, written by Justice Brett Kavanaugh, “handed Republicans a massive win” and is likely to “usher in the biggest change to campaign finance law since the Citizens United decision.”
The same report went on to note that Tuesday’s high court ruling “allows for unrestricted coordination between candidates and party committees. That means committees, like the NRSC or the DCCC, can run unlimited TV ads with allied candidates. More importantly, they can also buy those ads at the much cheaper rate offered to candidates. … Tuesday’s SCOTUS ruling will also eradicate the need for independent expenditure arms at party committees.”
Republicans already enjoyed a significant financial advantage over Democrats. The Republican-appointed justices just made it easier for the GOP to capitalize on that advantage.
* In Colorado’s closely watched Democratic primaries, incumbent Sen. John Hickenlooper fended off a challenge from the left, but some of his colleagues weren’t as fortune: Democratic socialist Melat Kiros ended long-serving Rep. Diana DeGette’s career in Denver’s congressional district, while state Attorney General Phil Weiser scored a major upset by defeating incumbent Sen. Michael Bennet in a gubernatorial primary.
* In the race for North Carolina’s open Senate seat, former Democratic Gov. Roy Cooper leads former Republican National Committee Chairman Michael Whatley in the latest New York Times/Siena poll, 50% to 43%, pointing to a possible pickup opportunity for Democrats.
Google Cloud and FactSet, a provider of data and artificial intelligence solutions to the financial markets, plan to jointly develop AI agents designed to assist with portfolio operations, deal advisory and corporate finance.
Tuesday’s Supreme Court ruling changing certain federal campaign finance limits could make a big difference in the battle for control of Congress this fall, giving Republican candidates who have been getting outraised by opponents direct access to more party cash.
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