Received

The imminent end of the interest rate hiking cycle is likely helping to underpin a recovery in the property market, the head of the Reserve Bank says.

After entering a downturn in 2022, the residential property market started rebounding earlier this year, and before many experts expected.

Reserve Bank Governor Philip Lowe said a major driver of the recovery was the "understandable perception in the community that the peak of interest rates is either now or close at hand".

Shifting population dynamics since borders reopened were also adding to demand for housing and new supply was failing to keep up.

"(When there is) a strong demand relative to supply, rents go up and where rents go up, (property) prices tend to go up," he told a parliamentary economics committee hearing in Canberra on Friday.

A third reason was the rising nominal incomes due to inflation, with Dr Lowe noting that while some suffer when interest rates rise, others do reasonably well.

"So people are saying, 'Well, if I can afford the current rate of repayments, and as long as I keep my job, there's going to be strong demand for housing going forward, and it's a good time to buy property'."

Dr Lowe stressed this was not financial advice but rather the perception circulating in the market.

But speaking alongside incoming deputy governor Michele Bullock and other senior officials, he said there were a few reasons to expect housing market dynamics to change.

This included the anticipated rise in unemployment as the economy slows.

He also said nominal income growth would start to slow, and the catch-up in migration since borders reopened had "almost run its course", suggesting population dynamics would start to go back to normal.

The central bank has hiked interest rates 12 times since May last year but has kept the cash rate on hold for two consecutive months, fuelling speculation the peak has been reached.

In the context of interest rate settings, Dr Lowe said recovering home prices would likely encourage people to "spend bit more" in aggregate.

But he said it would have a marginal effect and had not triggered a change in the path for interest rates, although it would support stronger economic growth next year.

Commenting on the transition from low fixed rate loans, which has been a source of concern and uncertainty for the RBA, he said the bulk of borrowers were coping with the jump in their monthly repayments

He said borrowers who had already made the transition from fixed rate loans were falling behind on their repayments at about the same numbers as those on variable mortgages for some time.

Dr Lowe said one of the reasons this transition was happening smoothly for most borrowers was that it was "the most telegraphed increase in mortgage repayments ever".

"People have known this is coming ... they knew their mortgage repayments were going to go up a lot and they started saving a bit more," he offered by way of explanation.

He said some banks have been proactive and called customers to help them prepare to transition off their low fixed rate, and that borrowers took advantage of a couple of years of very low interest rates to build up decent financial buffers.

© AAP 2023

The death toll from Maui's wildfires has risen to 53 as the fast-moving conflagration that turned the resort town of Lahaina into smouldering ruins is almost contained.

The island that forms part of the US state of Hawaii was caught off guard by at least three major fires that broke out on Tuesday night, cutting off the western side of the island and the historic city of Lahaina, where more than 270 structures were destroyed or damaged.

Many more people suffered burns, smoke inhalation and other injuries.

Search and rescue efforts continue, and thousands of people have fled into emergency shelters or left the island.

The wildfires took most of Lahaina's residents and visitors by surprise, forcing some to jump into the ocean to escape the fast-moving inferno.

Thousands of tourists were trying to leave Maui, many of them camped in the airport waiting for flights.

Vixay Phonxaylinkham, a tourist from California, said he was trapped on Lahaina's Front Street in a rental car with his wife and children as the fires approached, forcing the family to abandon the car and jump into the Pacific Ocean.

"We floated around four hours," Phonxaylinkham said from the airport while awaiting a flight off the island, describing how they held onto pieces of wood for floatation.

"It was a vacation that turned into a nightmare. I heard explosions everywhere, I heard screaming, and some people didn't make it. I feel so sad."

The death toll rose by 17 on Thursday to reach 53, Maui County said in a statement that also reported the Lahaina fire was 80 per cent contained.

The Pulehu fire, about 30 km east of Lahaina, was 70 per cent contained. There was no estimate for the Upcountry fire in the centre of the eastern mass of the island, Maui County said.

The Lahaina fire reduced entire neighbourhoods to ashes on the western side of the island. Lahaina is one of Maui's prime attractions, drawing two million tourists each year, or about 80 per cent of the island's visitors.

Tourists and locals alike fled with few or none of their belongings as the fire spread rapidly due to dry conditions, a buildup of fuels and strong winds.

The fires were the worst disaster to befall Hawaii since 1960, one year after it became a US state, when a tsunami killed 61 people.

The fate of some of Lahaina's cultural treasures remains unclear.

The historic 18-metre-tall banyan tree marking the spot where Hawaiian King Kamehameha III's 19th-century palace stood was still standing, though some of its boughs appeared charred.

US President Joe Biden approved a disaster declaration for Hawaii, allowing affected individuals and business owners to apply for federal housing and economic recovery grants.

The cause of the Maui wildfires has yet to be determined, officials said, but the National Weather Service said dry vegetation, strong winds, and low humidity fuelled them.

Wildfires occur every year in Hawaii, but this year's fires are burning faster and bigger than usual.

The Big Island of Hawaii also experienced at least two major brush fires.

Scenes of fiery devastation have become all too familiar elsewhere in the world this summer.

Wildfires, often caused by record-setting heat, forced the evacuation of tens of thousands of people in Greece, Spain, Portugal and other parts of Europe.

In western Canada, a series of unusually severe fires sent clouds of smoke over vast swaths of the US, polluting the air.

Human-caused climate change, driven by fossil fuel use, is increasing the frequency and intensity of such extreme weather events, scientists say.

© AP 2023

Savers have been urged by the head of Australia's central bank to make banks work harder for their money.

Asked if Australian banks are profiteering from rising interest rates, Reserve Bank governor Philip Lowe said he could understand why people were asking questions following Commonwealth Bank's record profit of $10.2 billion.

"But just to remind you, as well, the banks have a large amount of capital - the regulatory system requires banks to hold a lot of capital, and the CBA's return on equity was 14 per cent."

He said the return on equity for Australian banks was high but not out of line with overseas or other companies.

"Over the past year, in most major economies, banks are earning between 10 and 15 per cent return on equity at the moment because write-offs are low, because problem loans are low, and because unemployment rates are very low".

But he said there were concerns about competition across deposit products, which was a common theme around the world.

"So if you don't like the fact that banks are earning so much money, then I encourage you to shop around and make them work harder for your money," he said, noting some banks were paying more than five per cent interest on deposits.

The consumer watchdog is investigating the behaviour of banks when it comes to passing on higher interest rates to savers following concerns hikes across deposit products are ad hoc and conditional.

Dr Lowe made the remarks on banks at a parliamentary hearing, which will be among his last public appearances as head of the RBA.

Deputy and incoming governor Michele Bullock and other senior officials, also attended the hearing.

Dr Lowe also offered his thoughts on rent controls, which have been hotly debated in an environment of fast-rising rents.

He said rent controls reduce incentive to add to supply in most cases.

"It might help in the short run, it might relieve some pressure on people in the short run, and clearly that's the case.

"But we've got to keep a medium term perspective on this - will it add to the supply of rental accommodation over time? My judgment would be that it would not."

He recommended a longer term focus to the pressures on the housing market, flagging planning and zoning reforms as an opportunity to make the supply side of the market more flexible.

"Generally, giving people more money or capping prices doesn't help with the balance of supply and demand in the market," Dr Lowe said.

The central bank has hiked interest rates 12 times since May last year but has kept the cash rate on hold for two months in a row, fuelling speculation the peak has been reached.

Dr Lowe noted interest rates had been jacked up a lot in a short period and cash rate movements take time to work through the economy.

He said economic data lined up with Australia travelling down the "narrow path" he had been speaking about for some time.

But he said there were two main risks complicating this scenario.

The first was household consumption, which on one hand, has been supported by the strong labour market, and on the other, was under pressure from declining real incomes and higher borrowing costs.

There was also a risk of services inflation staying high due to strong demand for services in the wake of the pandemic, stronger growth in nominal wages and incomes and weak productivity growth.

© AAP 2023