Homeowners are feeling the pinch after rolling off their ultra-low fixed mortgage rates. They’re hoping it doesn’t get worse.
Another 2000 borrowers would fall behind on their home loans after any extra rise in the cash rate, modelling from credit bureau illion has found.
It comes as the Reserve Bank prepares to meet next week to consider whether to move the cash rate, taking into account Wednesday’s inflation figures as well as the state of the jobs market and the health of the economy. Barrett Hasseldine, illion head of modelling, said the proportion of home borrowers behind on their repayments had been increasing as interest rates rose and homeowners rolled from low fixed rates onto higher variable rates.
But there had been widespread cutbacks on household spending on retail, entertainment, restaurants and bars over the last couple of years, he said, as well as cuts to essentials such as health insurance and home and contents insurance. Demand for credit cards increased too. Modelling from Canstar found a couple who bought a home on a 5 per cent deposit using the First Home Guarantee Scheme in 2022 on the minimum income possible would have had repayments of less than 30 per cent of their combined income, the rule of thumb threshold for housing stress.
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