ASX Large Caps: Shares slip ahead of Easter break; RBA warns of ‘mortgage cliff’ in next 2 months

• The ASX slipped around 0.3% on Thursday
• RBA said borrowers could be facing a ‘mortgage cliff” in the next two months
• Tech stocks and Real Estate sectors sold off today

Aussie shares slipped around 0.3% on the last trading session before the Easter break. For the week, the ASX 200 index was up 1.3%.

The RBA Financial Stability Review report released today warned that one in five mortgage holders in Australia are about to fall off their fixed rate over the next couple of months, with their new repayments likely to increase significantly.

The RBA said about 16% of households with mortgages are in “mortgage prison”, unable to refinance to a lower rate.

The central bank also said that almost 50% of the nation’s poorest borrowers could be in mortgage stress because of high interest rates.

Betashares chief economist David Bassanese said, “Given this lagged policy impact, it’s little wonder the RBA this week announced a pause in hiking rates.”

House prices to lift in second half ?

A new research commissioned by Aus Property Professionals has revealed that 2 out of 3 Australians believe that the “property bubble” is about to burst soon.

Furthermore, 21% of those people believe it will happen within the next year, due to issues with the economy, interest rate hikes and the impending ‘mortgage cliff.’

But Lloyd Edge, property expert and best-selling author of ‘Buy Now’ believes otherwise, and advised that we could instead start to see an uplift in the value of property as soon as the second half of 2023.

“It’s unsurprising that the sentiment towards property is mostly negative right now, especially with all the pessimistic talk lately,” Edge said.

“However, keep in mind that in order for a major housing market crash to happen, we would need much higher unemployment rates and a huge oversupply of property.

“None of these things are occurring right now. Inflation figures have fallen for a second month in a row, there is no sign of a recession at this stage and jobs data remains strong.”

Edge added, “There is also unlikely to be further decline in property prices this year, as the market is stabilising as interest rate increases start to level off.

“There are still plenty of buyers in the market and a lack of supply, which is keeping prices up.”

To the ASX …

To the stock market, Healthcare was the best performing sector today, but Tech stocks were sold off after a 1% drop on the Nasdaq index last night.

Among the gainers today were CSL (ASX:CSL) and Bega Cheese (ASX:BGA), up 2-3% on no specific news.

Oil giant Santos (ASX:STO) had its AGM meeting today, with chairman Keith Spence telling shareholders that Australia is becoming “a harder place to invest”.

“We face ongoing challenges in securing regulatory approvals for resource development, price regulation, potential contract interference and the prospect of increasing resource taxation,” Spence said.

In other news today…

China’s Caixin data released this morning showed that China’s services activity in March revved up at the quickest pace in more than 2 years on robust new orders.

The Caixin PMI indes rose to 57.8 in March from 55.0 in February, which is the third straight month of increases.

Japan’s worst-ever bird flu outbreak has seen 17 million birds culled, sending egg prices soaring. And now the government said there’s a lack of space to bury dead chickens.

Later tonight, we expect to see the US initial jobless claims report.

BIG CAP WINNERS

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Market operator the ASX (ASX:ASX) rose 3% despite reporting that total capital raised on the Exchange in March was $5.4 billion, down 48% on the pcp.

BIG CAP LOSERS

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