Yahoo Finance RBA rate hikes to cost Aussies $10,000 a year
Aussies need to prepare for yet another interest rate hike when the Reserve Bank of Australia (RBA) board meets next week.
This month’s Finder RBA Cash Rate Survey found almost all panelists (97 per cent) believed the cash rate would change on Tuesday, with 90 per cent forecasting another 0.25 per cent hike.
This would bring the cash rate to 2.85 per cent - up from 0.1 per cent in April.
Also read: RBA predicts 20% housing drop
Also read: RBA slashes homebuyer budgets by $195,500
Also read: RBA warns 1 in 4 borrowers at risk of mortgage stress
Finder head of consumer research Graham Cooke said a seventh consecutive rate hike would be a tough burden for many households.
“The current series of rate hikes has added almost $9,000 to the annual cost of a $500,000 mortgage,” Cooke said.
“Another 25-basis-point hike will push that cost up to near $10,000.”
Cooke added that households should be prepared for even more rate hikes going into next year.
“The RBA has been crystal clear that its top priority is to tamp down inflation,” he said.
“After six hikes, inflation is at a 30-year high. More rate rises are likely on the way.”
Mortgage holders already struggling
Many Aussies with mortgages are already struggling to get by with the current rate hikes, Finder found.
Almost three quarters of Australians (70 per cent) said they couldn’t afford their mortgage repayments if there was another rate hike before Christmas.
That’s the equivalent of 4.1 million households who would have to make changes to their finances with just one more rate rise.
On top of that, 9 per cent (roughly 500,000 people) said they’d have to sell their property if hit with another hike.
A further 3 per cent admitted they would default on their mortgage if their interest rate went any higher.
Cooke said rapidly increasing interest rates would have dire consequences for Aussie households.
“The prospect of one more interest rate spike is just too much to manage for millions of households, causing many to go to extreme lengths,” Cooke said.
“Remember it’s not too late to find a better home loan deal. The best rates on the market now start with a ‘4’ rather than a ‘1’.
“Refinancing can dramatically lower your costs – mortgage holders could save thousands of dollars a year.”
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.