How could you pay an extra $1,000 a MONTH on your mortgage by Christmas, while interest rates are going up again this week?
- Mortgage holders can be forced to pay more than $1,000 extra per month
- Reserve Bank of Australia to raise interest rates by 0.25% on Tuesday
- Economists fear official cash interest rates could rise to 2.5 percent by the end of the year
Homeowners could be paying more than $1,000 a month extra on their mortgage by the end of the year as interest rates continue to rise.
The Reserve Bank of Australia is expected to raise official interest rates by at least a quarter of a percentage point during its board meeting on Tuesday.
It comes after the RBA raised rates by 0.25 percentage points in May.
Economists predict that official cash interest rates will continue to rise in the coming months and could rise to 2.5 percent by the end of the year.
The increase could have a huge impact on mortgage holders, who will be forced to spend more money to cover their monthly payments.
Homeowners may be paying more than $1,000 a month on their mortgage by the end of the year as interest rates continue to rise
The Reserve Bank of Australia is expected to raise official interest rates by at least a quarter of a percentage point during its board meeting on Tuesday
The average mortgage is $800,000 in NSW.
Borrowers paid $3,153 per month in early March, but could be paying $4,295 by December — an increase of $1,142.
The average new home loan in Victoria is $650,000.
Mortgage holders currently pay $2,654 a month, but could pay $3,450 by the end of the year — an additional $796.
Jo Masters, Barrenjoey’s chief economist, said the RBA faced an increasingly volatile economy as inflation rose and the number of heavily indebted home buyers increased.
“I don’t think I’ve ever seen so much volatility and interconnected changes in the economy in my career,” she said. Sydney Morning Herald†
“As a mechanic would say, the more moving parts, the greater the chance of something going wrong and the Reserve Bank would be very aware of that.”
The RBA expects inflation to reach 6 percent by the end of 2022 as the Russian invasion of Ukraine threatens to push the average Australian gasoline price above $2 a liter, despite a six-month fuel tax cut in the March 29 budget. up to 22 cents a year. litre.
“Inflation forecasts had been revised significantly higher compared to three months earlier,” it said.
The increase could have a huge impact on mortgage holders who will be forced to spend more money to cover their monthly payments
Underlying inflation factors were expected to develop over the forecast period, with the effects of global supply-side disruptions and housing cost inflation easing while domestic labor costs rose.
“These projections were based on an assumption of further interest rate hikes, in line with expectations drawn from surveys of professional economists and pricing in financial markets.”
Shane Oliver, chief economist at AMP Capital, said it was more likely that the cash interest rate would be a maximum of two percent.
“The RBA wants to slow spending to slow inflation, not crash the economy and push inflation back to pre-pandemic levels,” he said.