Young homeowners with mortgages have “carried the nation through the cost-of-living crisis” according to new research from Compare the Market showing how much higher rates may have impacted young homeowners.
Someone with an average loan of around $600,000* would have seen their monthly repayments rise from $2,218 to $3,694 as the cash rate increased to 4.35% between May 2022 – November 2023.
That’s $1,477 a month – around $17,700 in extra repayments over a year.
While the RBA has delivered some relief earlier this year, Compare the Market Economic Director said it was time to give people with a mortgage a “bigger break”.
“Young homeowners paying off a mortgage have carried the nation through the cost-of-living crisis,” Mr Koch said.
“They’ve had the worst of everything – higher prices at the supermarket, higher rates at the bank, plus the cost of everything from insurance to council rates going up.
“And of course, they had to spend much more to purchase a home in the first place.
“It’s thanks to their efforts that inflation is back in the Reserve Bank’s target range. They’ve tightened their belts, cut back on spending, and reckon its time some of that pressure came off.”
Rate cuts of 0.25% in February and May would have reduced monthly repayments on a $600,000 loan by around $193. Another cut in August could push that figure to $307 – a reduction of $3,684 over a year.
Impact of multiple rate cuts on monthly repayments
| Loan size | Impact of a 0.25% rate cut | Impact of x2 0.25% (0.50%) | Impact of x3 0.25% rate cuts (0.75%) | Impact of x4 0.25% rate cuts (1%) |
| $500,000 | $81 | $161 | $256 | $318 |
| $600,000 | $97 | $193 | $307 | $382 |
| $750,000 | $122 | $242 | $384 | $478 |
| $900,000 | $146 | $290 | $461 | $573 |
| $1,000,000 | $162 | $322 | $512 | $637 |
| *Calculations assume an owner-occupied loan with a variable interest rate of 6.3% that is reduced to 5.3% after four 0.25% rate cuts passed on in full by the bank. It assumes a 30-year loan term, with no ongoing fees. This does not take into account the reduction of the loan balance over time. | ||||
Mr Koch urged homeowners to look for savings regardless of whether the RBA choses to move on the cash rate at its 12 August meeting.
“We can’t rely on the Reserve Bank or banks and lenders to deliver mortgage relief. That means we have to be more vigilant ourselves to make sure we’re getting a good deal,” Mr Koch said.
“Compare the Market has found there can be a 0.50% difference between some advertised rates from the big banks so you can effectively create a rate cut of your own.
“If you haven’t refinanced in a few years, it might be time to take a look and see if you can save with a lower rate. If you’ve paid down your loan, and your home has increased in value, you might be able to achieve an even bigger discount.”
For more information, or to request an interview with Kochie, please contact:
Sarah Orr | 0401 044 292 | [email protected]
Notes for editors
Compare the Market is a comparison service that takes the hard work out of shopping around. We make it simple for Australians to quickly and easily compare and buy insurance, energy, and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket
