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Australian mortgage holders are bracing for tighter financial conditions as the Reserve Bank of Australia (RBA) has raised interest rates for the second consecutive time. This decision comes as part of ongoing efforts to manage inflation and stabilize the economy.
According to Canstar, a leading financial comparison service, most lenders promptly responded to the previous rate hike, with the majority implementing the full increase within two weeks of the RBA’s announcement.
What does this mean for homeowners with mortgages? Let’s break it down.
For those with a $500,000 mortgage, the combined rate hikes from February and March could lead to an increase of at least $151 in their monthly repayments, as indicated by Canstar’s data.
The impact is even more pronounced for individuals with a $600,000 mortgage, who may see their monthly payments rise by $181 due to the cumulative rate adjustments over the two-month period.
Those with a $700,000 mortgage are expected to pay more than $211 a month after the two hikes.
For someone with $800,000 left on their mortgage, the two hikes could add an additional $241 to their monthly repayments.
For those with a debt of $900,000, the culmulative increase could be an extra $271 per month.
Mortgage holders with $1 million of outstanding debt are likely to pay an additional $301 extra a month.
Canstar data insights director Sally Tindall said while the banks were likely to pass the rise through to their variable rate customers in full, there were ways to outsmart the rise.
“Banks might apply a blanket increase to their variable customer base, but still be willing to hand out cuts on a case-by-case basis,” Tindall said.
“Often it’s just a matter of stating your case.”
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