I’ve got the latest home loans and interest rates news for you, as well as a tax update for property investors given that tax season is just around the corner.

- Rate outlook remains uncertain

- Property investor tax alert

- 23.8% of borrowers have large loans

- Banking reforms announced

Inflation, which is currently at 3.6%, is the key. The RBA is trying to reduce inflation to its target range of 2-3%. The whole point of increasing the cash rate was to reduce spending and thereby reduce inflation. Inflation has fallen significantly since peaking at 7.8% in December 2022, but is still too high for the RBA’s liking.

The latest data are giving conflicting signals. On the one hand, the economy has slowed markedly, growing just 0.1% in the March quarter. Less economic activity means less spending, which puts downward pressure on inflation. On the other hand, the unemployment rate has recently improved, falling from 4.1% in April to 4.0% in May.

That’s why no one can be certain what will happen with interest rates; indeed, it’s possible the RBA might increase rates further. So please budget accordingly.

Most property investors are making errors in their tax returns, despite the fact 86% use a tax agent, according to Australian Taxation Office (ATO) Assistant Commissioner Rob Thomson.

In the March 2024 quarter, 23.8% of new home loans (by value) had a debt-to-income ratio of six times or greater, according to the banking regulator, APRA.

Mortgage lenders will be required to make it easier for customers to switch loans by ensuring they have direct and easy access to the appropriate reforms, under banking reforms announced by the federal government.