If you felt the tremors of a thunderous sigh about 2.30pm that was the sound of millions of relieved borrowers after the RBA’s decision to hold rates another month.
Compare the Market’s General Manager for Money, Stephen Zeller said it was no surprise when the average homeowner had already had an extra $1451 loaded onto their monthly repayments since the start of the rate rise cycle in May last year.
“While today’s decision is a welcome relief for borrowers, we’re not in the clear until the RBA meets its inflation target,” Mr Zeller said.
“Already millions of borrowers are staring down the fixed-rate cliff, with the majority of rates locked during the pandemic due to expire over the next six months.
“It’s a worrying time for many households as the RBA treads a fine line between quashing inflation and avoiding a recession which could cause massive job loss.”
|Mortgage size||Increase in average monthly repayments since the start of May 2022 (400 basis points)|
|Reserve Bank Lenders’ Interest Rates. Monthly repayments do not include any reduction in the mortgage balance over time. These calculations assume: An owner-occupied variable interest rate of 2.86% p.a in May 2022; principal and interest (P&I) repayments; cash rate increases are passed on in full; the loan term is 30 years; and there are no monthly fees.|
Compare the Market’s latest research shows the vast majority of borrowers have been doing what they can to cut back on spending, with almost half cancelling big-ticket purchases and over a third missing out on holidays to instead save money for necessities.
Asked what they feared most about a possible recession, a quarter of those surveyed said their top concern was keeping up with everyday expenses such as groceries, insurance and energy bills.
About 20% were most worried about meeting mortgage repayments while 16% feared losing their job.
Mr Zeller urged borrowers not to be complacent and act well in advance to understand their options.
“We recommend starting your research at least six to eight weeks before your fixed rate is about to end to ensure you don’t slide onto a back-book rate,” Mr Zeller said.
“The difference between some of the advertised rates we analysed was 65 basis points, which could mean hundreds of dollars in savings for many borrowers.”
|Mortgage size||The difference between variable rates in the market|
|Difference in monthly minimum repayments between advertised rates of 6.34% and 5.69%|
|Monthly repayments do not include any reduction in the mortgage balance over time. These calculations assume: An owner-occupied variable interest rate of 6.24% compared to 5.54% p.a; principal and interest (P&I) repayments; the loan term is 30 years; and there are no monthly fees.|
*Survey of 1,004 Australians, conducted in July 2023.
For more information, please contact:
Natasha Innes | 0416 705 514 | [email protected]
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