Rise hurts hip pocket

Brace now for mortgage mauling

HOMEOWNERS in almost 400 suburbs across Queensland may have to find more than $500 a month to pay their mortgage if the official cash rate hits 2 percentage points – a forecast not out of the question if inflation is not brought under control.

Analysis by PropTrack has revealed there are 377 suburbs across the state where a 2 per cent rise will drain more than $500 from the monthly budget, with a staggering 106 suburbs facing the prospect of finding an extra $1000-plus a month.

It comes after the Reserve Bank of Australia (RBA) lifted the official cash rate from 0.1 to 0.35 per cent on Tuesday, the first increase in 11 years, with experts divided on just how high it will go.

PropTrack economist Angus Moore said Queensland had seen a record number of cashed-up interstate buyers move to the state during the pandemic, forcing locals to compete at higher prices.

He said that while recent purchasers were likely to earn more than a suburb’s average income, which includes young workers and retirees, the number gave a sense of just how hard it would be for an average local to buy a home in the suburb.

In the Cairns region, the median house price in Palm Cove is $850,000, with a 2 per cent rise equating to an extra $760 a month.

On Thursday, Moody’s Investor Service warned that mortgage delinquency rates would increase moderately over 2022 because of rising interest rates and slowing property prices.

“Interest rate rises will pose the most risk for mortgages with high balances and for those whose repayment amounts are close to borrowers’ maximum repayment capacity,” Moody’s vice president and senior credit officer Alena Chen said.

A recent survey by Money.com.au also revealed that 24 per cent of Queenslanders had no savings buffer to counter rate rises, while 22 per cent had less than $5000.

But Mr Moore said that smart buyers would have made the most of the record low rates and paid ahead of their mortgage schedule.

He added that loan providers would also have factored in a buyer’s ability to pay above the current rate.