Home / Business and Economy / Homeowners Brace for Rate Hikes, But Few Will See Payments Rise
Homeowners Brace for Rate Hikes, But Few Will See Payments Rise
2 Feb
Summary
- Most homeowners won't see repayment increases from Reserve Bank rate hikes.
- Many borrowers pay extra, blunting the impact of rate changes on budgets.
- Financial advice and helplines are available for those struggling with bills.
A significant majority of Australia's 3.3 million mortgaged homeowners are expected to avoid an increase in their monthly repayments, even if the Reserve Bank of Australia (RBA) lifts its cash rate target on Tuesday. Financial markets and many economists predict a rise from 3.6% to 3.85%, which would mark a notably brief and shallow rate-hiking cycle.
This resilience stems from the fact that many homeowners have been proactively paying more than the minimum on their variable-rate loans. As a result, their direct debit payments have not adjusted to previous rate cuts. This financial buffer means that a future rate hike will not automatically increase their immediate outgoing payments, though it will affect the overall loan payoff timeline.
For the minority of homeowners who have only paid the minimum required, the anticipated rate increase will have a direct impact. These individuals may need to prepare for potential further rises in the coming months. Those finding it challenging to manage mortgage payments alongside other rising household costs are advised to seek professional financial counselling or contact the national debt helpline for assistance.
