The Barefoot Investor has taken a swipe at the Reserve Bank of Australia, saying young people should be ‘p**sed off’ it decided to cut interest rates and likely trigger another surge in real estate prices.
On Tuesday afternoon, the RBA eased the interest rate by 25 basis points to 3.85 per cent – the lowest since June 2023.
Scott Pape said while the cut would alleviate mortgage repayments for millions of Aussies already on the property ladder, it would have a negative impact on young people trying to get a foothold because house prices will rise.
‘If I was a young person right now, I would be pretty p**sed off,’ Mr Pape told news.com.au.
‘Every time a young person gets close (to being able to afford a property), it just keeps getting more expensive.’
Mr Pape also took aim at the Albanese government for its introduction of a five per cent deposit scheme for first-home buyers, labelling the policy as ‘totally stupid’.
Experts have warned the policy – set to come into effect from January 1 next year – will increase the number of buyers in the market, and without any increase in supply, that will push house prices up and trap young people into huge mortgage debts they can’t afford or will take decades to pay off.
The Barefoot Investor Scott Pape said young Aussies should be ‘p**sed’ at the RBA’s decision to cut the cash rate
Mr Pape said the cash rate cut would negatively impact young Aussies who are trying to buy their first home as it would because property prices to skyrocket
‘People shouldn’t be buying a home in one of the most expensive cities in the world if they can’t afford it,’ Pape said.
‘I don’t understand how a responsible government can stand by and say this is a good thing.’
Managing Director for SQM Research, Louis Christophe, said he expects property prices to rise from this month, see a 10 per cent increase by the end of the year and continue to rise into 2026.
Mr Christopher said auction clearance rates would skyrocket due to the rate cut and advised first-home buyers to try and enter the market before the end of 2025.
‘First home buyers are in a better buying position compared to six months ago,’ he said.
‘Their purchasing and borrowing power has increased. However, if I am right about price rises, they will need to move quickly, otherwise they will be back to square one on affordability.’
An owner-occupier borrower with an average $660,000 mortgage would save $107 on their monthly repayments as a result of the latest rate cut. Typical variable home loan rates with the major banks were pushed down to under six per cent within hours of the decision.
ANZ became the first of the Big Four banks to announce it would match the RBA’s latest rate cut with a 25 basis point cut to its variable rates.
On Tuesday afternoon, the RBA eased the cash rate by 25 basis points to 3.85 per cent – a low which has not been seen since June 2023.
This means its online-only rate is falling to 5.59 per cent on May 30.
Westpac followed seven minutes later, matching ANZ’s equally lowest online-only mortgage rate, but from June 3.
The Commonwealth Bank matched its competitors shortly after, with borrowers getting relief on May 30.
Australia’s biggest home lender updated its forecasts to have more rate cuts in August and November, with relief at the RBA’s next meeting in July a ‘live’ possibility.
NAB’s lowest online-only rate is falling to 5.94 per cent on May 30, but it’s available for borrowers with a small five per cent deposit.
RBA boss Michele Bullock acknowledged that the 13 rate rises across 2022 and 2023 had been challenging for borrowers.
The string of hikes was the most aggressive pace of monetary policy tightening since the late 1980s.
‘I know this period of relatively high interest rates has been and continues to be challenging for many households and businesses but it was essential that we brought inflation down,’ Ms Bullock said.
The RBA was coy about suggesting more rate cuts were on the way, but left the door open for further relief as inflation is expected to fall into the target band.
‘Inflation has fallen substantially since the peak in 2022,’ Bullock said.
‘Higher interest rates have been working to bring aggregate demand and supply closer towards balance.’
