With the RBA raising interest rates yet again last week, I’m hearing the whispers growing louder. People are talking about a looming mortgage cliff.
Whilst we enjoyed several years of record low interest rates, many home owners chose to fix their mortgages. They effectively locked in that lower rate for 1-3 years, some even longer.
However, many home owners are now facing the challenge of their fixed rate mortgages ending. When this happens, their monthly mortgage repayments will jump significantly.
And that is the mortgage cliff. RBA’s own internal data research shows that if the official rate hit 3.6 percent, just over half of all home owners on variable mortgages would see a 20%+ reduction in spare cash flow, IE, cash leftover after their mortgage is paid.
With the most recent interest rate hike, we are not sitting at 3.35%. I suspect some belts will be being tightened even further as we move into 2023.
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By Wendy Chamberlain
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With a passion for all things real estate spanning 20 years, Wendy loves that her role as a Buyers and Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.chamberlainadvocates.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.