RBA hits Aussies with another interest rate hike: ‘Relentless’
Renters are also feeling the pain from the RBA’s non-stop interest rate hikes.
Aussie homeowners have been hit with a tenth consecutive interest rate hike from the Reserve Bank of Australia (RBA), with the central bank hiking the official cash rate by another 0.25 per cent - bringing it to 3.6 per cent.
RBA governor Philip Lowe acknowledged the impact the consecutive rate hikes were having on households.
“The Board recognises that monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments,” Lowe said.
“There is uncertainty around the timing and extent of the slowdown in household spending. Some households have substantial savings buffers, but others are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living.”
Also read: $600,000: The latest RBA hike means your house cost has doubled
Also read: RBA’s Lowe warns interest rates ‘have not peaked’
Also read: RBA has questions to answer after latest rate hike
Federal Treasurer Jim Chalmers said while the hike was anticipated, Aussie families are expected to feel the pain.
"This was expected, it was flagged, the markets anticipated it, but it will still sting," Chalmers said following the announcement.
Finder head of consumer research Graham Cooke said it was bad news for homeowners already doing it tough.
“Australians with the average loan size of around $600,000 will be forking out over $13,000 more per year on their mortgage compared to what they were paying a year ago,” Cooke said.
“While homeowners deserve a break from the relentless increase in pressure, we can expect even more hikes from the RBA this year.”
In the most recent Finder RBA Cash Rate Survey, experts forecasted that the cash rate would peak on average at 4.10 per cent, with almost four in five who weighed in expecting it would peak in the first half of 2023.
Average Aussie mortgage repayments
Month | Cash rate | Average home loan rate* | Average monthly repayment | Average monthly increase | Average annual repayment | Average annual increase |
April 2022 | 0.10% | 3.45% | $2,697 | - | $32,364 | - |
March 2023(full rate rise applied) | 3.60% | 6.47% | $3,808 | $1,111 | $45,696 | $13,332 |
4.10% (predicted peak) | 4.10% | 6.97% | $4,009 | $1,312 | $48,108 | $15,744 |
A whopping 36 per cent of Aussie homeowners said they struggled to pay their mortgage in February, according to Finder’s Consumer Sentiment Tracker.
Pressure is building for Aussie renters
The number of new housing loans for owner-occupiers and investors fell 30 per cent and 27 per cent respectively, in December 2022 versus December 2021, according to ABS data.
Experts believe this will put even more pressure on rental prices, as people continue renting rather than purchasing a home, and less investors buy properties to rent out. This would mean demand would stay high, with no new supply entering the market.
Cooke said while mortgage costs have gone up faster than rental costs, that doesn’t mean the worst has been avoided.
“This could mean there is a lag yet to hit the already heated rental market,” Cooke said.
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