May 3rd 2024.
A recent report has revealed that almost a quarter of homeowners in Australia are facing the possibility of selling their properties due to the increasing cost of living. The rise in interest rates has caused mortgage holders to collectively lose a staggering $60 billion in just under two years. This worrying trend has been highlighted by a survey conducted by financial comparison service Compare the Market, which found that 21% of homeowners have either already sold their property or are concerned about having to do so in the future.
David Koch, the economic director of the company, explained that this is a result of many fixed-rate mortgages expiring and rolling over to higher variable rates, leaving millions of people struggling to keep up with their mortgage repayments. He also noted that while the survey showed a high percentage of concerned homeowners, it is unlikely that all of them will actually end up selling their properties. Koch emphasized that for most homeowners, selling their homes is the last resort and they will do everything in their power to hold onto their properties.
He also mentioned that the upcoming tax cuts in July and a potential cash rate cut in the second half of the year could provide some relief for struggling homeowners. However, these measures may not be enough to ease the financial burden on many Australians. The survey by Compare the Market is further supported by another report released by fellow comparison service Mozo, which calculated that the 13 consecutive interest rate hikes by the Reserve Bank since May 2022 have led to a collective increase of $60 billion in mortgage repayments. This amounts to a staggering $3 billion per month.
According to Peter Marshall, a banking and rates expert at Mozo, compared to other economies, Australians feel the effects of every cash rate hike heavily, as evident by the significant amount of interest being paid on mortgages in the country. The Reserve Bank is set to meet next week to discuss interest rates, and while a hike is unlikely, a cut is not expected until November.
Marshall explained that it is highly unlikely for the RBA to increase the cash rate for the 14th time, but they may mention the risk of a hike in their statement next week. This is a strategic move to try and achieve the same impact without actually increasing the rate, as the RBA would only do so if absolutely necessary. As the country eagerly awaits the decision by the Reserve Bank, you can stay updated on all the latest breaking news, celebrity updates, and sports news by following us on our WhatsApp channel. We respect your privacy and your details will remain private, so join us now!
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