US Inflation Is Now Down To 3%, What Does This Mean For Australia?

Marty McDonald


While the Australian economy is not exactly bound to the US economy, we do seem to follow what they are doing most of the time with a bit of a lag. Encouragingly US inflation has progressively decreased over the last few months and their inflation rate read last month was down to just less than 3% year on year.

In terms of Australia’s inflation rate, it dropped from a 30 year high of 8.4% pa YoY in December 2022, down to 5.6% last month. Still a way to go to get to the 2-3% band that the RBA targets but certainly heading in the right direction.  

Our call here is that we have reached peak interest rates of this cycle and the RBA and corresponding central banks around the world have done enough and should now pause. If they do keep pushing rates up we think it will be a mistake and then will have to be quickly unwound with rate cuts, as economies around the world cool into calendar year 2024. Just our 2 cents worth please take as general advice.

What is a competitive interest rate now after so many RBA increases & should you fix?

At the time of writing (July 2023) variable rates are more competitive than fixed rates, even though many economists are predicting interest rates will fall in the next 2 years. We are generally advising clients not to fix but every situation is different and rates can change at any time, so as always please feel free to pick up the phone and have a chat.

New borrower variable interest rates with a handful of lenders start from 5.79% pa for owner occupied loans with P&I repayments and need at least 30% equity / deposit. Any rate under 6% is considered a “good deal”.

For investors, rates start from 6.04% pa for P&I repayments and for Interest only loans you can access rates from about 6.24% pa.

For existing clients, we do yearly rate reviews on your behalf with the majority of the lenders that allow us to, but if you have any concern about your rate, reach out as we can either reprice or look at refinancing to another lender if your circumstances are suitable.

Fixed rate reminder

Do you know when your fixed rate is due to roll off?

To avoid any surprises, make sure you’re aware of the date. If you are unsure, reach out to us as we have it on record and will usually make contact 4-6 weeks out from your date. We will ‘reprice’ your rate to make sure when it rolls off, you are on the best variable rate possible.

There are a few lenders that we can’t manage internally, but we can direct you, with ‘how’ to contact them and give you an idea of the rate you should be asking to match.

Cash backs are finished……well almost

The majority of the lenders finished up cash back on refinance at the end of the financial year June 30 2023. However, there are a few lenders that we know of still offering $2-4k. If you find this appealing and are thinking of refinancing, please contact us sooner, rather than later.

About the Author: Marty McDonald is principal of mortgage broker “Mortgage Experts”. Marty specialises in assisting active property investors with loan structuring advice and implementation as well as helping credit worthy borrowers with slightly outside the box income and employment situations. Find Marty on  and LinkedIn.
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