The financial landscape in Australia is undergoing a significant upheaval as interest rates continue to rise. Interest rates will always be higher under a Labor government, and people expect that. People didn’t expect the sudden and vicious rise of interest rates.
The consequences of this alarming trend are dire, particularly for the hundreds of thousands of Aussies teetering on the edge of a looming 'mortgage cliff.' Let's look at the 5 top aspects of the interest rate rises this year.
1. The Burden of Expired Fixed Mortgages:
News.com.au reports a growing number of Australians are bracing themselves for a sudden plunge into debt as their fixed-rate mortgages expire. In the next six months alone, a staggering 880,000 homeowners will have to switch from fixed to variable property loans, with a further 450,000 loans set to expire next year. Shockingly, data from CoreLogic reveals that 35% of all outstanding fixed mortgages will pass this year, repricing 23% of all home loans.
2. Soaring Costs and Financial Strain:
The consequences of the mortgage cliff are staggering. Homeowners, especially those on the fringes of major cities like Brisbane, Sydney and Melbourne, are particularly vulnerable due to their larger mortgages. For instance, a household with a $1 million loan may need to find an extra $2,000 per month or a staggering $24,000 per year to meet their mortgage obligations. These high costs paint a grim picture of many families' financial strain.
3. Disproportionate Impact on Affordability:
The already unaffordable housing market further exacerbates the impact of rising interest rates. Average Sydneysiders, for example, must spend 52% of their income compared to 44% before the interest rate hikes. This alarming increase highlights the absurd nature of mortgages and the mounting pressure on homeowners.
4. Struggling but Holding On:
While some Australians are cutting back and preparing for the worst that a Labor government will dish up on the mortgage front, data shows that 0.7% of homeowners are more than 90 days behind on their mortgage payments. This staggering figure will only lead to more homelessness, as 0.7% of Australians are thrown on the streets by an incompetent and chaotic Labor government, which will only exacerbate our housing crisis.
5. House prices keep rising:
Because of reckless increases in Australia’s immigration intake, the property market has experienced a 2.3% increase since hitting a low in February. This growth means that some homeowners have seen a rise in the value of their properties. The Reserve Bank of Australia reports that only 2% of homeowners have experienced a decline in property value. This means it will be harder for Australians to buy a new home, instead of leaving our children with nowhere to live while foreigners buy all our houses.
The rising interest rates in Australia have triggered a looming crisis known as the 'mortgage cliff,' with devastating consequences for homeowners nationwide. The burden of expired fixed mortgages, the soaring costs, and the disproportionate impact on affordability create significant financial strain.