Yeah, whilst anything is possible in this lovely world of ours, it's difficult to see interest rates coming back down in 2023. Inflation will very likely come off a bit from these high levels, but probably won't fall back to under 3% before the end of next year. Which basically means, there's no chance of rate cuts. The only way they'll be contemplated is if we have a deep global recession, which itself is quite unlikely. Low growth, or even a mild recession won't be enough for the central banks to drop rates.
Westpac's Bill Evans said this morning that the US should see their cash rate surpass 4% by early 2023 and here we should see 3.35%. It's a worthy reminder that 120 days ago we had rock bottom rates. While the cash rate here has gone from 0.1% in May to 2.35% this month, it's likely only the first one or two rate hikes have had traction on the property market at this stage (it usually takes 9-12 months or longer, for interest rate changes to take their full effect).
Considering that most mortgage holders who took out fixed rate loans in 2020-21 will be paying roughly double the rate on their loans soon once their fixed rate term ends, and that stock is increasing as we enter Spring/Summer, it's clear to me the worst is yet to come. I suspect that the next two quarters (Oct-Dec 22 and Jan-March 23) are going to see some pretty ugly declines in property prices everywhere, with the biggest drops being in areas that have relied the most on interest rate cuts in the first place, for their growth in 2020-21.
