Mortgage holders will have to shell out even more, with the Reserve Bank (RBA) announcing it will raise the cash rate by another 25 basis points to 2.85%, the highest level since 2013.
Some Australians will see their mortgage payments rise by more than $ 100 per month after this rate hike alone, putting further pressure on already tight budgets during the cost of living crisis.
“It’s another tough day for Australians who are already under pressure,” said treasurer Jim Chalmers shortly after the ruling was passed.
“That means Australians with mortgages will have to find that little bit extra in their monthly budget to account for those interest rates.”
Sydney will see the biggest increase, increasing by $ 115 per month after the 25 basis point increase, based on the average loan size of $ 768,000, according to PropTrack data.
Then there are ACT mortgage holders, who will see a $ 105 increase in their monthly repayments, and Melburnians, who will see a $ 96 increase.
Those in Brisbane will see a $ 89 increase in their monthly bill and those in Adelaide will have to shell out an additional $ 78.
Many homeowners are already feeling the pressure, with Finder’s consumer sentiment monitoring showing that 30% of homeowners are already struggling to repay their home loan each month.
According to the data, repayments on an average loan of $ 509,422 will reach $ 906 more per month by the end of next year.
For those on a $ 500,000 loan, the monthly repayment has increased by $ 760 since May according to data from RateCity.
This jumps to a $ 1,140 increase from May for a $ 750,000 loan, reaching a whopping $ 1,520 in pocket for those with a $ 1 million mortgage.
The seventh consecutive rate hike saw buyers “take advantage” of less competitive conditions, according to PropTrack senior economist Eleanor Creagh.
“The fastest rise in the cash rate since 1994 has rapidly rebalanced the housing market from last year’s extreme growth levels, with prices falling from the national peak,” he said.
“Prices nationwide are now 3.53% below their March high. As borrowing capacity is limited and buyers’ budgets shrink, more expensive markets are leading the way for lower prices.
The opposition criticized the government following the RBA’s decision, saying it was not doing enough to help Australians overcome the cost of living crisis.
“Australians have been told that their electricity bills will rise by more than 50%, their mortgage payments will continue to rise, the cost of food will remain high, inflation will continue to rise and yet the government has not yet a plan to tackle the cost of living crisis, “said opposition treasurer Angus Taylor.
“The Labor Party budget was a missed opportunity to help Australians at a time when they really need it.
“The reality is that it is becoming increasingly difficult for Australians to make ends meet under this new inexperienced Labor government that is clearly unable to manage the economy.”