A top NSW judge is bracing for courtrooms in the Supreme Court to be clogged with home repossession cases as interest rates rise and homeowners fall behind repayments.
A top NSW judge is bracing for courtrooms in the Supreme Court to be clogged with home repossession cases as interest rates rise and homeowners fall behind repayments.
On Wednesday night, NSW Chief Justice Andrew Bell issued the sobering warning in a grim sign of what’s to come for cash-strapped Aussies stuck in mortgage prisons.
Speaking at a Law Society of NSW dinner, Justice Bell said the workload for fellow lawyers was set to increase to a “significant” extent because repossession claims are set to explode.
“We unfortunately anticipate a very significant growth of work in the possession list this year with the likely continued rise in interest rates likely to be productive of extreme mortgage stress,” he said, per the Australian Financial Review.
The stark prediction comes just days before the Reserve Bank of Australia’s first meeting for the year where they will announce if the cash rate will increase yet again, setting the tone for the rest of 2023.
Currently, the cash rate sits at 3.1 per cent, a significant leap from its pandemic low of just 0.1 per cent.
Just a few days before Justice Bell aired his concerns, new research also found things could be going to get worse, not better, for mortgage holders struggling amid the cost of living crisis.
Based on historical interest rates in the past 33 years – the average rate has been 4.6 per cent – which is 1.5 per cent higher than the current cash rate of 3.1 per cent, the Canstar research found.
This could signal more rate pain on the way with the equivalent of six more 0.25 per cent rate rises meaning mortgage holders would be slugged with an extra $498 on monthly repayments for a $500,000 loan. That would mean a total of $1386 added to repayments since April 2022.
Those homeowners with a $750,000 loan would see $2080 added to repayments after rates rose eight consecutive times alongside another six more hikes on top.
For a $1 million loan, this would add up to $2773 extra in repayments if interest rates were to reach 4.6 per cent.
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