Wednesday, March 22, 2023
The Property Reporter
  • Home
  • News
  • Retail
  • Residential
  • Office
  • Industrial
  • Hotel
  • Buying a Home
  • Selling a Home
No Result
View All Result
  • Home
  • News
  • Retail
  • Residential
  • Office
  • Industrial
  • Hotel
  • Buying a Home
  • Selling a Home
No Result
View All Result
The Property Reporter
No Result
View All Result
Home Buying a Home

RBA increases to interest rates mean home buyers who bought at the peak are facing rapidly rising mortgage repayments

PrR by PrR
2022-08-02
in Buying a Home
0
RBA increases to interest rates mean home buyers who bought at the peak are facing rapidly rising mortgage repayments
20
SHARES
152
VIEWS
Share on FacebookShare on Twitter


While some Australians may rejoice at the idea of a drop in house prices, interest rate rises mean home owners face the prospect of their asset dropping in value at the same time their mortgage repayments steadily increase. 

Key points:

  • House prices in Australia are dropping at their fastest pace since the global financial crisis
  • Those who bought houses at the peak now face a double whammy of dropping asset prices as rising interest rates
  • Financial counsellors are anticipating a spike in demand as interest rates increase

And those who bought recently, at the peak of the market, are more likely to have the most left to pay off on their loans, meaning interest rate rises will cause them the most pain.

Bobby Graham bought a house in January in Hobart’s outer suburbs for slightly more than he had hoped to pay, after saving for the past five years.

Just months before his purchase completed, as late as October, the Reserve Bank of Australia was still saying it expected interest rates would not rise until 2024.

There have now been three months of straight rate rises, and another due today.

While he is not struggling to meet payments, Mr Graham says the changing circumstances have meant he needed to adjust something else — his expectations.

He has had to make tweaks to his lifestyle and reassess his living expenses.

“It’s the perfect storm — you pay the higher price because you bought at the peak of the market then there is an increase in interest rates,” he said.

“And it becomes obvious that everything else is becoming more expensive due to inflation.”

He described the increases in his mortgage repayments as “a bit of a kick”. 

 A bearded man in a hoodie smiles
Mr Graham has had to re-examine his budget and adjust his expectations.(ABC News: Luke Bowden)

As part of his changes he has had to cancel several interstate trips planned for this year in a bid to save money and meet home and mortgage commitments.

“You pay so much of your income, just to maintain your house,” he said.

His advice to others in his situation is to take a thorough look at the household budget and adjust expectations.

Home prices dropping but interest costs going up

According to figures released on Monday by property analysis firm CoreLogic, median house prices in most capital cities are falling at a steady rate — and are expected to continue the trend.

In Hobart, there was a 1.5 per cent drop in house and unit prices in the past month, in line with similar falls in Sydney and Melbourne. 

CoreLogic compares the downswing to the same drop experienced during the Global Financial Crisis in 2008 and the 1980s recession.

Grey roofs in a Tasmanian suburb
The RBA has increased interest rates for three straight months, with another increase expected this afternoon.(ABC News)

The Reserve Bank (RBA) is acting to stem inflation by increasing the cash rate, which in turn is being passed onto consumers via higher mortgage rates. 

The RBA is expected to lift the rate again when it meets today.

The head of research at CoreLogic, Eliza Owen, warns potential home buyers while they may feel like they are buying a house at a discounted price, the reality of interest rate increases will see more spent on repayments. 

“The interest you pay on the debt you take out will be more,” she said.

Financial counsellors expect demand spike

A woman with glasses stands in front of a sign reading Anglicare
Anglicare financial counsellor Fiona Moore said people should call the National Debt Hotline if they were struggling.(Supplied: Anglicare)

Anglicare financial counsellor Fiona Moore said home buyers had experienced years of high prices, with a lot of people borrowing money while interest rates had been low.

“With interest rates rising, and property prices decreasing, it’s going to cause a big problem,” she said.

Anglicare is expecting its client list to grow.

“People should rationalise their spending such as personal loans and credit cards and look at options to cut other payments down,” she said. 

She said people who were struggling could also call the National Debt Helpline on 1800 007 007.

Want more Tasmanian news?

Set the ABC News website or the app to “Tasmania Top Stories” from either the homepage or the settings menu in the app to continue getting the same national news but with a sprinkle of more relevant state stories.

Here’s a taste of the latest stories from Tasmania:



Source link

Previous Post

Sterling council OKs development incentives that will help Kmart site developer – Shaw Local

Next Post

Meet a few faces behind the plant pop-ups flourishing at local markets

Next Post
Meet a few faces behind the plant pop-ups flourishing at local markets

Meet a few faces behind the plant pop-ups flourishing at local markets

RECOMMENDED

2023 Real Estate Market Forecast: What Homebuyers and Sellers Can Expect

2023 Real Estate Market Forecast: What Homebuyers and Sellers Can Expect

2023-03-17
The Growing Demand for E-Commerce Warehouses: An Opportunity for Industrial

The Growing Demand for E-Commerce Warehouses: An Opportunity for Industrial Real Estate

2023-03-17

MOST VIEWED

  • Fox Lake hopes to bring hotel to Mineola lakefront site; ‘Recognizing our unique position on the Chain O’ Lakes is a key driver for our progress’ – Chicago Tribune

    Fox Lake hopes to bring hotel to Mineola lakefront site; ‘Recognizing our unique position on the Chain O’ Lakes is a key driver for our progress’ – Chicago Tribune

    755 shares
    Share 302 Tweet 189
  • Doubling Down With the Derricos’ Deon boasts about ‘buying up blocks’ & promotes real estate business after foreclosure

    193 shares
    Share 77 Tweet 48
  • Historic home on 32-acre site annexed into Elgin for new industrial development free to anyone who wants to move it

    157 shares
    Share 63 Tweet 39
  • Plas Glynllifon’s new owner speaks for first time on difficult challenge to renovate mansion

    119 shares
    Share 48 Tweet 30
  • Atlanta developer plans downtown Dallas towers

    94 shares
    Share 38 Tweet 24

Recent Posts

  • 2023 Real Estate Market Forecast: What Homebuyers and Sellers Can Expect
  • The Growing Demand for E-Commerce Warehouses: An Opportunity for Industrial Real Estate
  • Hybrid Work: The Future of Office Spaces
  • Real Estate Investing in 2023: Predictions and Trends
  • The Future of Retail: Technology’s Impact on the Shopping Experience

CATEGORY

  • Buying a Home
  • Hotel
  • Industrial
  • News
  • Office
  • Residential
  • Retail
  • Selling a Home
  • Privacy & Policy
  • About Us
  • Contact Us
  • Advertise with us

© 2021 Copyright Property Reporter

No Result
View All Result
  • Home
  • News
  • Retail
  • Residential
  • Office
  • Industrial
  • Hotel
  • Buying a Home
  • Selling a Home

© 2021 Copyright Property Reporter