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The Reserve Bank of Australia lifted its key interest rate from 4.35 percent to 4.6 percent, its highest level since 2011. Two mortgage holders describe how the fourth increase this year is squeezing family budgets and raising fears about affording everyday costs.
The Reserve Bank of Australia has lifted its key interest rate from 4.35 percent to 4.6 percent, its highest level since 2011 and the fourth increase this year.
The decision has left many mortgage holders reeling, with some saying they are already stretched to the limits. Shane McClymont, a 50-year-old toolmaker, learned of the rate hike through a text from his wife asking whether the family could afford their son's birthday dinner this week. It is always special, he says. The kids get to choose their takeaway of choice for their birthday.
Mortgage holders face tight budgets
She is wanting to know what we are going to do for dinner, he says. We do not know if we can afford the takeaway or not, whether we are going to have to cook. McClymont bought his house in Sydney's western suburb of Doonside two decades ago. He lives in the three-bedroom, one-bathroom home with his wife and their four children, aged between 11 and 21.
They still have a loan balance of $345,900, with McClymont paying $625 a week in repayments, including an additional $100 to help pay down the loan faster. He says the family is going to have to cut back and it is going to be really tight. We have already cut all the streaming services, food, petrol, and we do not get to go away on family holidays or anything as much, if at all, he says.
We invested in a big freezer out the back, out in the garage. We have to shop the specials, so we are going to go to the wholesalers for meat and shop the specials at Woolworths and Coles and things that can last. McClymont says the family has also been forced to make other really difficult decisions. His wife, a stay-at-home mum, has had to go back into full-time employment.
McClymont cuts spending to cope
It is just an endless cycle of the same thing, he says. Every time you get a pay rise or something at work, it is taken off you tenfold with the increases in the bills. Every time you try and get ahead, you just keep going backwards. Ann Mureithi, a mother of two in Melbourne's south-eastern suburb of Pakenham, is also worried by the hike.
The 31-year-old freelance financial adviser moved to Australia from Kenya in 2018 as an international student. She later met her husband, bought a home in 2023 and had two children, milestones that made her feel like she had achieved the Australian dream. But the RBA's latest rate hike has fuelled anxiety about how her family will manage rising mortgage repayments and living costs.
When an increase happens, you are thinking, where do I get that extra $200 or that extra $300, she says. That is such a scare because it is a lot of money. It is not like you have an option where you can say, oh, I will cut this out. The family pays more than 30 percent of their income towards the mortgage.
Freelance adviser worries about income
Mureithi says the pressure has left her questioning whether she needs to work more, despite already struggling to find enough time while caring for two young children. The overwhelm of thinking, should I work more, she says. I do not even have enough time with young kids as well. You think, how do I even get that extra time to work, to get that extra pay.
There could be further blows in store for mortgage holders. Speaking after the announcement, the RBA governor, Michele Bullock, said the board would raise rates again if that is what is needed to get inflation down, although she acknowledged the impact on households and businesses. Now, I know this decision is difficult for households with a mortgage and businesses with loans, but high inflation hurts all Australians, especially the most vulnerable, Bullock said.
Every household has seen how the price of everything has gone up in recent years. Pay packets do not go as far as they used to and that is why we need to stop this high inflation. But Mureithi says rising costs have left her feeling as though there is a threat waiting for her. The anxiety, the small fear of what if something happens, she says.
Governor warns of further rate rises
Then they get my house. That is a scary part. That is where I do not feel like I am still living the Australian dream.
Interest Rate Hike Mortgage Repayments Cost Of Living Australian Households
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