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Finder surveyed 39 experts and economists for its monthly RBA Cash Rate Survey, of whom all 97 per cent – or all but one – believed the cash rate would change next Tuesday.
Most believed the increase would be another increase of 25 basis points, bringing the cash rate to 2.85 per cent.
Graham Cooke, head of consumer research at Finder, said a seventh consecutive rate hike – 275 basis points in total – will be a tough burden for many households.
“The current series of rate hikes has added almost $9000 to the annual cost of a $500,00 mortgage,” he said.
“Another 25-basis-point hike will push that cost up to near $10,000.
“The RBA has been crystal clear that its top priority is to tamp down inflation. After 6 hikes, inflation is at a 30-year high. More rate rises are likely on the way.”
The predicted interest rate rise could spell disaster for millions of homeowners.
Almost three quarters of Australians (70 per cent) surveyed said they couldn’t afford their mortgage repayments if there was another rate hike before Christmas.
That’s the equivalent of 4.1 million households who would have to make changes to their finances with just one more rate rise.
Worryingly, nine per cent (equivalent to roughly 500,000 people) said they’d have to sell their property if hit with another hike.
A further three per cent admit they would default on their mortgage if their interest rate went up any higher.
Leanne Pilkington from Laing+Simmons said the case for month-on-month increases was weakening.
“At some stage soon, mortgage holders will need a reprieve, as larger repayments are already having a significant impact on household budgets,” she said.
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Cooke urged homeowners to look for a better home loan deal.
“The best rates on the market now start with a ‘4’ rather than a ‘1’,” he said.
“Refinancing can dramatically lower your costs – mortgage holders could save thousands of dollars a year.”
House prices set for further drop
The majority of experts who weighed in predict a price drop for houses across all capital cities.
Sydney is projected to suffer the biggest drop of 13.4 per cent from its peak, a loss of $174,200 off the median property.
Melbourne is not far behind, with experts predicting a 12.9 per cent drop for a loss of $116,100 in value.
Cooke said he thinks the panel’s predictions for house price drops in Sydney are actually optimistic.
“We’ve already seen more than 10 per cent wiped from housing values in some areas since the peak, and the cash rate will just keep climbing,” he said.
“It’s a worse-case scenario, but price falls of up to 25 per cent would not be unrealistic.
“Houses in Hobart and Canberra are tipped to lose 9.8 per cent and 9.5 per cent, while the other capital cities are looking at drops between nine per cent and 9.4 per cent.
“If lessons are to be learned from similar price falls in places like Ireland post GFC, the outer suburbs and apartments will be the hardest hit, and the slowest to recover.”
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