This article is from the Australian Property Journal archive
MORE than a quarter of Australian mortgage customers have had their repayments surge by over 6% since interest rates began to rise in May.
According to a new survey examining the impacts of climbing interest rates from Savvy, 25.7% of mortgage holders across the country have increased by more than 6%, with 52% of seeing repayments rise by as much as 5%.
This latest survey comes after Canstar’s First Home Buyer Survey revealed that 90% of Australian first home buyers are stressed about their chances of saving enough for a home deposit.
Moreover, 18.1% of mortgage holders surveyed reported a repayment rise between 6-10%, with 6.26% seeing increase between 11-20% and 1.34% reporting a repayment rise of 21% or more.
While the RBA increased the official cash rate by 50 basis points to 1.85% at the second August meeting, economists expect these hikes to carry on for some time as inflation continues to grow, at 6.1%.
With 70% of mortgage holders having experienced some degree of repayment increase, 60.6% of responded that they would “spend less” on consumer and other goods in response.
“The survey results presented here show economics in action – a rise in interest rates means a corresponding downward trend in overall spending,” said Bill Tsouvalas, CEO of Savvy.
“But that is of little comfort to Australians already doing it tough and set to do it tougher as the RBA puts the brakes on a little more each month.”
At the same time, the impact on retail sales hasn’t really been felt at this stage, with sales holding strong at record levels over June, as Australians spent $34.2 billion across stores and online over the month.
32% of surveyed homeowners also said they would rely on their savings to form a buffer for the increase, while the same percentage responded that they would look to increase their income.
While as the cost of living continues to mount, 34% of Australians surveyed reported to seeing no pay change since 2021.
While 26% reported a pay rise of up to 5% and 7% of those surveyed said they had has a pay rise between 6% and 10%.
“Only twenty-six percent of mortgage holders in our survey said they’d try and fix their current home loan rate. This should be one hundred percent. If you are on a mortgage, the time to lock in a fixed rate or consider refinancing is now. The time to lock in a low fixed rate is now. Don’t put it off. This should be your first priority,” added Tsouvalas.
