Mortgage holders have been dealt a Melbourne Cup Day blow with interest rates on the rise again.
The Reserve Bank of Australia (RBA) has lifted rates to an 18-year high of 4.85 per cent. It is the fifth rise this year.
The decision is likely to put huge pressure on households, already dealing with a cost-of-living crisis, in the lead-up to the Christmas period.
“If you owe $750,000, which is a normal mortgage in Penrith now, today’s rise costs you about $120 a month,” said Mark Stevenson of Evolve Lending.
“Add up the five rises this year and you’re paying about $600 a month more than you were back in January. For most families that money doesn’t come out of savings. It comes out of the coffees, the tradie you were going to book and the kids’ sport.”
And Stevenson says there’s a bigger worry looming.
“The jobs numbers for western Sydney are the real worry. Unemployment in the Penrith and Blue Mountains area went from four per cent to 4.9 per cent in one month,” he said.
“Parramatta is 6.7 and Blacktown 5.8. People out here are losing jobs faster than anywhere else in Sydney, and now their mortgage has gone up too.”
RBA Governor Michelle Bullock will soon speak to the media to discuss the decision.
NSW Opposition Leader Kellie Sloane said governments must also do their part, calling on action from the Labor State Government.
“Families are cutting back on groceries, putting off purchases and wondering how they will cover the next mortgage repayment. They deserve a government prepared to show the same spending discipline,” Sloane said.
“Everywhere I go there is a red-hot, fierce anger at the Minns and Albanese governments as they spend more while NSW families cut back.”
Taylor Blackburn, personal finance specialist at Finder, said many borrowers are facing interest rates they’ve never seen before.
“Anyone who took out their first mortgage in the past 18 years has never seen a cash rate this high. For a whole generation of homeowners, this is uncharted territory,” Blackburn said.
“If you haven’t reviewed your home loan this year, now is the time.
“There’s still quite a gap between the best and worst rates on the market. Two borrowers with the same loan amounts could be paying very different mortgages.”
Treasurer Jim Chalmers will address the media later this afternoon.
Lenders are expected to start making rate increase announcements in the coming days.
Troy Dodds
Troy has more than 20 years experience as a journalist, working with some of Australia's leading media organisations. In 2023, he was named Editor of the Year at the Mumbrella Publish Awards.
