Mortgagees are almost maxed out – Mozo

A shocking number of homeowners will suffer more mortgage pain if the Reserve Bank continues to hike rates, with new research from Mozo revealing that 73% of mortgagees will not be able to afford back-to-back rate increases if they continue past May.

The findings come as ANZ, NAB, and Westpac all predicted the cash rate to continue to increase to 4.1%, which could see rates rise continuously until May or June.

Mozo compiled the big four banks’ interest rate prediction in the table below:

“Despite countless explanations from the RBA of why rates are continuing to rise, it doesn’t make it any easier on household budgets,” said Claire Frawley (pictured above), personal finance expert at Mozo. “The compounding effect of these rate increases has seen mortgages increase by thousands of dollars a year.”

A recent survey of mortgage holders found that 20% of borrowers could not afford any rate increase this year, while a further 16% said their budgets could only hold out until March.

The graph below shows how many more hikes Australians can afford this year according to the Mozo survey.

If the cash rate is lifted in March by 25 basis points, a borrower with a $600,000 mortgage would have to fork out an extra $92 in monthly repayments, which is a total increase of $14,172 since rate increases started.

Below is a table from Mozo showing how a 25bp increase to the current average variable rate of 5.85% would affect a borrower with a $600,000 mortgage.

“It’s really shocking to think how many households will be struggling if there are more rate rises,” Frawley said. “Everyone has already been making big sacrifices when it comes to finding extra cash, now they will need to decide what’s next on the chopping block.”

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