Higher interest rates and high inflation to weigh further on housing demand


Commentary leading up to the RBA monthly board meetings has pivoted from if interest rates will rise to how much interest rates will rise.

Most forecasts were leaning towards a 50 basis point lift in the cash rate, and that is exactly what the RBA delivered, along with further commentary focussed on high inflation, which the RBA expects will peak later this year.


The latest 50 basis point hike takes the cash rate to 1.35%, 125 basis points higher relative to the emergency lows of 0.1% seen before the tightening cycle commenced on 5 May 2022.

If lenders pass today’s rate hike on in full, which is likely, the average variable mortgage rate for a new owner-occupier loan will be around 3.66% (up from 2.41% in April).

For a borrower with a $500,000 housing debt, with principal and interest (P&I) repayments on a variable rate mortgage, the average monthly repayment would have risen by approximately $366 per month since rates started rising.

For a $1 million loan balance, repayments would be up around $732 per month.

The additional repayment cost for a new owner-occupier borrower across each capital city varies significantly.

Today’s 50 basis point rise implies a new borrower in Sydney (assuming a 20% deposit and a P&I loan on a 30-year term) would be facing an extra $600 per month since April, while in Perth where housing values are substantially lower, a recent borrower would be looking at a $507 per month increase in repayments.

How Much Could Mortgage Repayments Rise For New Owner Occupier Borrower


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