How much have mortgages increased since interest rates started rising?

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October 3, 2022

The average Australian is making hundreds of dollars more in mortgage payments than this time last year, and with interest rates projected to rise, the situation is expected to get even worse.

The country’s official cash rate stayed at a record low of just 0.1% from November 2020 to May this year, marking the beginning of a series of consecutive increases.

May saw a 0.25 per cent rise, with another 0.5 per cent rise each month since the Reserve Bank of Australia (RBA) board meeting, sharply increasing the amount homeowners have to pay doing. about their mortgage.

Chart showing interest rates increasing from 0.1% to 2.35% from February to September 2022.

In 2022, interest rates will rise so far. sauce: SBS News

How much will the cash rate increase in October?

AMP Capital chief economist Shane Oliver expects rates to rise by at least 0.25% today.

“Everyone agrees that the Reserve Bank will hike rates again and that’s because inflation is still climbing high,” he said.

Economists are divided on whether the increase is 0.25 percentage points or 0.5 percentage points, but Oliver believes the recent series of large increases will need time to have the desired effect.

“It will have a lagging impact on the economy. The Reserve Bank needs to cool down for that lagging impact to show,” he said.

“That’s why some people, including myself, think the Reserve Bank will and should cut rates to 25 basis points instead of keeping them at 50 basis points.”

Oliver said the Reserve Bank is still concerned about inflation and the Australian economy has yet to experience a significant slowdown, which could be cited as a reason for the big rally.

Core inflation remains at 4.9%, well above the RBA’s target range of 2-3%.

How much more have mortgage holders paid since interest rates started rising?

Financial product comparison site RateCity estimates that people with $500,000 mortgages have already paid more than $600 a month to pay off their mortgages since April.

If interest rates rose by 0.25% on Tuesday, the total increase from May to October would be 2.5 percentage points. sauce: SBS News

RateCity estimates that a 0.5% rate hike means those people will have to set aside about $150 more a month for their mortgages, a total increase of about $760 from May. I’m here.

Rising interest rates are also impacting the ability of prospective homebuyers to borrow.

RateCity estimates that recent interest rate increases have lowered the average person’s maximum borrowing capacity by about 20%, or $134,500.

https://www.sbs.com.au/news/article/interest-rates-have-been-rapidly-rising-how-much-more-are-mortgage-holders-paying/8o8sxpbve How much have mortgages increased since interest rates started rising?