If this forecast is realized, the average borrower with a $500,000 loan size and 25 years remaining would be looking at a $140 monthly increase – or $472 since the RBA began lifting rates in May 2022.
For those with bigger loans, the repayment jumps are equally stark.
A person with a $750,000 loan would be looking at a monthly increase of $211 (up $708 a month since May) while those with a $1 million loan would be facing a monthly increase of $281 (or an eye-watering $944 a month increase since May ).
Australia’s cash rate is currently 1.35 per cent, so a 50-basis-point increase would take the baseline borrowing rate to 1.85 per cent.
The market is anticipating that the RBA will continue hiking interest rates until they hit 3 per cent, or until inflation is tamed – whichever comes first.
RateCity.com.au research director Sally Tindall said tomorrow’s rate hike, if realised, would be causing many to take a detailed look at their monthly expenses.
“Some borrowers may now be hitting the panic button as the rate hikes start to snowball,” Tindall said.
“Finding an extra $500 a month to cover the mortgage will be a struggle for many families who are already juggling rising grocery and petroleum costs.
“With inflation now set to rise to 7.75 per cent and several more cash rate hikes in the pipeline, many households will need to bunker down for the next six to 12 months.”
Tindall said a side-effect of rising interest rates was a retraction of the property market, which has seen prices skyrocket during the historic-low days of a 0.1 per cent cash rate.
“The rapid rise to the cash rate, and the increasingly gloomy forecasts, have Australia’s property market rattled,” she said.
“We are already seeing significant drops to house prices in key property hotspots such as Sydney, Melbourne and Hobart, as would-be buyers hit the pause button to see how the chips fall.
“If the RBA hikes again tomorrow, it’s possible there may soon be no lenders with variable rates under 3 per cent. This is a stark change from just 12 months ago, when 113 lenders were offering variable rates under 3 per cent.”
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