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If the Reserve Bank of Australia (RBA) were to hike the cash rate to 3 per cent by the end of this year, Aussies could be paying up to, or even more than, $6,294 a month on mortgage repayments.
All four of the major banks, Commonwealth Bank, Westpac, ANZ and NAB, are anticipating further rate hikes this year.
Westpac and ANZ expect a cash rate above 3 per cent by the end of the year, while CBA and NAB are expecting a rate around 2.5 per cent.
If the cash rate were to hit 3 per cent by year’s end, mortgage holders would really feel the pinch.
Data provided to Yahoo Finance by RateCity.com.au found that an owner-occupier paying principal and interest with 25 years remaining on a $600,000 loan would see their monthly repayments hit around $3,776.
For the same person with $750,000 remaining on the loan, repayment would reach $4,720 a month by Christmas.
Finally, for someone with $1 million left on their loan, repayments would soar to $6,294 a month by December.
RateCity research director Sally Tindall told Yahoo Finance families were starting to “feel the heat”.
“Households have been hit with four rate hikes in as many months, with a few more likely in the pipeline,” Tindall said.
“We’ve also got inflation pressures pushing up prices at the supermarket, the petrol station, even the humble takeaway coffee is starting to spike. Families are feeling the heat on all fronts.”
Tindall said while many families were able to take the initial rate hikes in their stride, there would likely be a shift in people’s spending habits from here on in.
“While many families are already doing it incredibly tough, we’re not likely to see a huge wave of borrowers default on their mortgages, at least not at this stage,” she said.
“That’s because people tend to do whatever it takes to keep up their repayments, because the consequences of defaulting can be dire.”
Tindall said Aussies struggling to make ends meet, or who thought they would in the coming months, should take action now.
“Print out a list of your expenses, see where you can move to a better deal or cut back on spending, and reach out for help early,” she said.
“The banks have hardship programs that can help you chart a course through.”
