Interest rates rise bites GC

NEARLY 10,000 more Gold Coasters are struggling to pay their mortgages than a year ago, as interest rate rises bite hard.

The board of the Reserve Bank on Tuesday lifted the cash rate by 0.25 taking interest rates to 3.6 per cent.

Inflation is currently sitting at 7.8 per cent.

This means a household with a $750,000 mortgage will pay an extra $116 from this month, with their repayments having increased by $1474 since 2022.

It is the tenth time in the past year the rate has jumped, delivering another hammer blow to struggling Gold Coast households which are already facing financial pressure.

New data compiled by Melbourne-based firm Digital Finance Analytics (DFA) reveals the number of Gold Coast households facing mortgages stress has increased from 19,881 in February 2022 to 27,777.

It’s also jumped from 25,404 just one month ago.

DFA boss Martin North said the “significant shift” was not surprising as it hit first homebuyers and young families.

“Households are having to put a greater proportion of their income into paying their mortgage or rent and they under the pump but unfortunately I don’t see a way out of it for them,” he said.

“If you look at the granular detail, it is a lot of first home buyers and young families who are in a world of pain and my surveys are finding there are more people who are financially out of control and haven’t realised how serious it is.

“If you talk to debt councillors, the number of young people phoning up for help is growing.”

Monthly mortgage repayments are expected to skyrocket mid-year for thousands of homeowners who took out mortgages at fixed rates in the past two years while the cash rate sat at record lows, with the fixed period coming to an end.

Mortgage stress means homeowners are spending at least 30 per cent of their income on loans. Rental stress is defined the same way.

The postcodes with the highest proportion of struggling homeowners are 4216 and 4209, home to the expensive waterfront mega mansions of Sovereign Islands, Paradise Point and Runaway Bay, the rapidly growing suburbs of Coomera, Pimpama, Upper Coomera respectively.

Rounding out the top three was 4211, taking in Nerang, Carrara, Highland Park and Pacific Pines.

Ray White Burleigh Group CEO Tiger Milan said the struggling economy was having an impact on families.

“Those who did not capitalise during Covid are feeling the mortgage stress and in the past month I have had more conversations about divorce than I ever have before, which is linked to money pressure,” he said.

“However, interesting the interest rates rises have not been reflected by huge price downturns on the Gold Coast.”

Tuesday’s increase was the 10th consecutive month that interest rates have risen, with the 0.25 per cent hike in May the first such increase in 12 years. They rose again by 0.5 per cent monthly through September, before slowing to 0.25 in October.

It has risen by 0.25 per cent monthly from November, excluding January when the RBA board did not meet.

Reserve Bank Governor Philip Lowe said he expected inflation to fall, though flagged further rates rises.

“The Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary,” he said.

Colliers Gold Coast director Steven King said real estate sales had remained consistently strong among buyers.

“There’s no doubt the consecutive rate rises have had an impact on the market and impacted on the disposal incomes of some homeowners,” he said

“While the market has softened we hold a very positive long term view of Southeast Queensland and in particular the Gold Coast where there is a large housing shortage and continued high demand for quality commercial assets.”