Australia

Mortgage holders face more repayment pain as Reserve Bank hikes cash rate to 2.6 per cent

The Reserve Bank of Australia (RBA) has lifted the official cash rate by 0.25 percentage points – or 25 basis points – to 2.6 per cent.
It’s the sixth consecutive month the central bank has lifted the rate in a bid to manage .

Core inflation is sitting at 4.9 per cent – still well above the RBA’s target range of 2 to 3 per cent.

How will mortgage holders be impacted by the rate rise?

The average Australian is paying hundreds of dollars more in mortgage repayments than this time last year and with more interest rate increases forecast, it is only expected to get worse.
The nation’s official cash rate sat at a record low of just 0.1 per cent between November 2020 and May this year, when the first of a series of consecutive rises began.

Financial product comparison website RateCity estimated those with a $500,000 mortgage were already paying more than $600 a month extra since April for home loan repayments.

Interest rate increases so far in 2022. Source: SBS News

Interest rate rises are also affecting the borrowing capacity of those looking to buy a home.

RateCity estimates the average person’s maximum borrowing capacity has dropped by approximately 20 per cent, or $134,500, as a result of the recent interest rate rises.

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