As the RBA revealed its latest rates call today, it was told to pay close attention to a \u201cdeeply concerning\u201d rise in national mortgage default risk.<\/p>\n
The Reserve Bank elected to keep the cash rate on hold at 4.35 per cent, after three rate hikes earlier this year.<\/p>\n
The Finance Brokers Association of Australia (FBAA) pleaded with the RBA not to increase rates today, saying it must \u201cconsider the real world, and in the real world people are hurting and mortgage stress is rising\u201d.<\/p>\n
It pointed to new data by comparison group OurTop10 that shows an 18 per cent increase in national mortgage default risk.<\/p>\n
FBAA CEO Leo Gagic has urged borrowers under pressure to seek help before they miss a repayment.<\/p>\n
\u201cThese findings are not unexpected, as our own published research dating back to 2021 found that thousands of borrowers were vulnerable to even modest interest rate increases after a prolonged period of low interest rates,\u201d he said.<\/p>\n
Mr Gagic said the rising risk of mortgage default reflects the combined impact of higher interest rates over recent years and escalating living costs, with many households reaching a financial \u2018tipping point\u2019 after years of drawing down savings.<\/p>\n
\u2018We\u2019re in a property recession\u2019: Buyer\u2019s agent warning<\/p>\n
This comes as a buyer\u2019s agent says one of Australia\u2018s biggest markets is already in a \u201cproperty recession\u201d.<\/p>\n
The RBA is widely expected to announce the cash rate will be kept on hold at 4.35 per cent, which would be a relief for households who have been hit with three rate hikes this year.<\/p>\n
But it might not be enough to steady the ship. Price Buyers Agents founder Glenn Price sent his followers a note on Monday morning declaring \u201cwe\u2019re in a property recession\u201d \u2014 warning more than 60 per cent of auctions in his region of south-east Queensland were failing to sell.<\/p>\n
<\/p>\n
\u201cThis weekend I went to seven properties, all between $950k and $1.1m, the kind of price point that used to have buyers lining up like it was free drinks at a nightclub,\u201d he wrote.<\/p>\n
\u201cAt more than half of them, I was the only one there.<\/p>\n
\u201cJust me and the real estate agent standing around watching tumbleweeds.\u201cThat\u2019s not a slow market. That\u2019s a market that\u2019s stopped.\u201d<\/p>\n
Brutal message for panicking homeowners<\/p>\n
The Barefoot Investor has also sent out a blunt message to Australian property owners panicking about falling house prices.<\/p>\n
For the bestselling author and finance commentator, this is exactly what the country needed after years of unchecked growth.<\/p>\n
Scott Pape says the property downturn is a long-overdue correction that could finally give younger Australians a fighting chance after decades of prices racing ahead of wages.<\/p>\n
\u201cHouse prices are falling, and that\u2019s a good thing,\u201d he said.<\/p>\n
\u201cFor anyone under 40 who\u2019s given up on ever owning a home, this is the best news since your dad stopped emailing you the auction results with \u2018food for thought\u2019 in the subject line.<\/p>\n
\u201cYet for a real estate agent with an Audi lease, it\u2019s the end of the world.<\/p>\n
\u201cHeck, if you listen to the property industry you\u2019d think the sky was falling. <\/p>\n
\u201cWorst auction day in 30 years!\u2019<\/p>\n
\u201c\u2018Property panic!\u2019<\/p>\n
\u201c\u2018Sharpest correction in 40 years!\u2019<\/p>\n
\u201cSo \u2026 let\u2019s check the scoreboard.<\/p>\n
\u201cOver the June quarter, prices across the combined capitals slipped by just 2.5 per cent. Over the past year they\u2019re still up 3.9 per cent, according to Cotality.<\/p>\n
\u201cWhat is true is that at the moment, the market is colder than a mother-in-law\u2019s kiss.\u201d<\/p>\n
MORE: RBA to make Aussies lose $100k today<\/a><\/p>\n He went on to explain reality in clear-as-day terms to those worrying about losing out.<\/p>\n \u201cIf prices were to fall 10 per cent \u2026 they\u2019d still only be back to where they were in late 2024,\u201d he said.<\/p>\n \u201cSome perspective you don\u2019t get from the outraged: Average house prices have increased by more than 400 per cent since 2000, partly on the back of taxpayer-funded landlord welfare. They\u2019ve grown much faster than workers wages. Which is why we\u2019re in this pickle.<\/p>\n \u201cMy view? This is a correction we\u2019ve needed for 20 years. The government set out to make property investing less attractive, and they get the gold star.<\/p>\n \u201cFor a new property investor, the income is less than they\u2019d get on a savings account. The only way the sums ever worked long-term was the price going up at a constant clip. Take that away and you\u2019re volunteering to fix someone else\u2019s dishwasher at 9pm on a Sunday.\u201d<\/p>\n Mr Pape pointed to recent polling data that showed a majority of homeowners thought falling prices was a good thing overall.<\/p>\n \u201cAnd the public (as usual) is streets ahead of the politicians here. A Resolve poll found 61 per cent want prices to fall. Yes, even homeowners. Which sounds kind of mad, a couple hoping their biggest asset drops in value \u2026 until you clock the 28-year-old still asleep in the back bedroom,\u201d he wrote, criticising Australia\u2019s broader real estate culture.<\/p>\n \u201cSomewhere along the way we started treating houses like a share price. Something to check, brag about, and borrow against. We forgot what they\u2019re actually for. A house is for living in. So when the news runs around with its hair on fire about \u2018the crash\u2019, look at who\u2019s actually panicking.<\/p>\n \u201cIt\u2019s not the young couple who might finally get a foot in the door. It\u2019s the bloke with the Audi lease. Let him sweat.\u201d<\/p>\n