When rates pain will end
MORTGAGE holders are bracing for more hip-pocket pain after the Reserve Bank hiked interest rates yet again, adding on average about $120 per month more to repayments.
At its monthly meeting this week, the RBA board lifted the official cash rate by 25 basis points to 3.6% – its highest level since June 2012 and the 10th consecutive increase since last May.
And it was very likely there was more coming, PropTrack senior economist Eleanor Creagh said.
“Interest rates have increased substantially in a short period, but we’re probably going to see another rise next month,” Ms Creagh said.
However, she predicted that would be the last hike Australians saw for a while, with the RBA board likely to pause after April to see the impacts of its aggressive approach flow through.
“There is some evidence that a wage-price spiral can be avoided and an indication that the December quarter was indeed the peak in inflation,” Ms Creagh said. How much this rate hike will cost
As has been the case with the previous nine rate hikes, there’s little doubt lenders will pass on today’s increase in full.
As such, a typical borrower is now likely paying about $18,900 more in repayments annually since May.
For those with $500,000 outstanding on their home loan, the February hike could add an additional $80 to their monthly mortgage repayments.
Mortgage holders with a balance of $750,000 will pay an extra $121 a month after today’s increase, while those with a $1 million loan balance will cough up an extra $161 per month. Full impact of rate rises
Mortgage Choice chief executive Anthony Waldron urged all borrowers to check they’re not paying more than they should.
“If you haven’t asked your mortgage broker to review your mortgage in the past 12 months, now is a great time to chat to an expert and start your year off on the right foot,” Mr Waldron said.
“I encourage all borrowers to take control of their home loans and be proactive about getting a better deal.” Housing market impact Skyrocketing rates brought an end to the Covid-induced property boom, quickly rebalancing the market and seeing values fall from peak levels in most parts of the country, Ms Creagh said.
Although, current conditions are proving advantageous for some, she pointed out.
“Sellers in market now are benefiting from low competition with other vendors, as buyers vie for available stock. The constrained level of properties available for sale has concentrated buyer demand and is putting a floor under home prices to a degree.”
The latest PropTrack Home Price Index shows a modest rise at a national level in February.
“Even as interest rates continue to rise, we’re closer to the peak in interest rate tightening than not and if the RBA hits pause on its tightening cycle, home prices will likely begin to stabilise,” Ms Creagh said.