Citing ongoing concerns about inflationary conditions, and the potential for tight labour markets to fuel further domestic inflation, the RBA continued along its less aggressive path of rate hikes in November, lifting the cash rate a further 25 basis points to 2.85%.
The cash rate is now 30 basis points above the pre-COVID decade average and at the highest level since April 2013. Arguably, households were far less sensitive to the cost of debt when interest rates were previously this high, with the ratio of housing debt to annualised disposable income roughly 17% lower than it was in June 2022.
If the full rate hike is passed on to mortgage rates, which is likely, the average variable mortgage rate for a new owner occupier loan is set to reach approximately 4.96%, up from the April low of 2.41%. Based on a $750,000 loan amount and principal and interest repayments on a 30-year loan term, the rate hiking cycle to date has added approximately $1,079 to monthly mortgage repayments.
The cumulative 2.75 percentage point rise through the tightening cycle –since May takes home loan rates above the 2.5% serviceability buffer that was used before October 2021 and close to the current 3 percentage point serviceability buffer.
November’s rate hike may leave some recent borrowers approaching uncharted waters with regards to their ability to service their loan; a situation made harder due to persistently high cost of living pressures that were unlikely to be factors at the time of origination.
Click the link to read the full article https://www.corelogic.com.au/news-research/news/2022/mortgage-rates-close-to-the-upper-end-of-apras-mortgage-serviceability-buffer
Commentaires