Why the ‘Lucky Generation’ without mortgages is still dismayed by RBA rate hike | The Business
Gathered around the bar after a successful bowls match, a group of retirees has mixed feelings about the Reserve Bank’s call to increase interest rates for the first time in two years. While they’re in good financial positions, they worry for their children, who have big mortgages. One-third of Australians own their homes outright, according to the Australian Institute of Health and Welfare, citing census data, so they won’t be affected by higher mortgage repayments. Instead, they could actually benefit if banks now raise deposit rates on savings. But a third of Australians have mortgages, according to Canstar, and those with variable rates could now see their repayments increase by $90 per month on a $600,000 home loan with 25 years remaining. The hike by the RBA takes the cash rate to 3.85 per cent. Now inflation is picking up again, the RBA’s governor says the central bank must stem economic pressures to bring price hikes back within its preferred range by 2027.
The Commonwealth Bank, NAB and ANZ are hiking variable home loan rates on February 13, except for Westpac, which is waiting until February 17. Roy morgan says, these higher payments will plunge an extra 41 thousand people into mortgage stress, taking the total to more than 1.2 million. And there’s worse to come, with more economists tipping another rate hike in May. NAB’s chief economist Sally Auld even thinks there’s a slim chance of one in March. That will cut the borrowing capacity for anyone wanting to a buy home even further but it won’t send house prices plunging. Ray White chief economist Nerida Conisbee says there are a lot of underlying issues keeping housing expensive. Emilia Terzon reports.
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