Cairns homeowners tighten budgets with interest rates set to rise again

An expected fifth interest rate hike in five months is expected to bite Cairns locals’ budgets on top of high cost-of-living expenses. Read what they’re most worried about.

FAR NORTH residents are getting ready for the fifth interest rate hike in five months on Tuesday with the effect starting to make a major impact on budgets and homeowners’ ability to meet mortgage obligations.

Interest rates across Australia are sitting at 1.85 per cent, with a prediction that the RBA will increase interest rates by 0.50 per cent, bringing rates from 0.1 per cent in April to 2.35 per cent. 

The hike is causing concern among mortgage holders, with the high cost of living and larger repayments putting a strain on family budgets. 

Far North residents are anticipating the fifth interest rake hike in five months as the RBA will meet on Tuesday, September 6. Picture: David Gray/Bloombergrg

For some, a rise in interest rates may make the housing market more affordable, but concerns around quality of housing and continuous essential cost of living pressures are making it hard to get into the market despite the price drop.

Cairns man Sam Sher said while he currently didn’t own property, the rate rises meant he wouldn’t be able to get the same quality of housing. 

“The rate rises will mean that when I can buy a house, the house I get will be a little bit worse or not as big as I can borrow because I can borrow less money. I won’t be getting into the market for a few more years, which could also mean when I am ready to borrow, the prices might be back up again, so it is a wait and see,” he said. 

Cairns man Sam Sher said while he currently didn’t own property, the rate rises meant he wouldn’t be able to get the same quality of housing due to less borrowing power. Picture: Brendan Radke

“You definitely notice the pinch of cost of living more making it hard. I went to the supermarket yesterday and it cost me $160 for two bags of shopping so it does make you think twice and balancing money.”

Cairns City local Petter Krebs said that a further rake hike was very concerning and was now considering re-evaluating budgets to afford larger repayments.

“Interest rates going up tomorrow is concerning; it will mean I will have less money and the flow-on effects from that with high cost of living is also a concern,” he said.

“I am paying a lot more since the rates have been going up and things are changing quickly at this stage. Money is manageable but with another increase readjusting the budget is definitely on the cards and is something to look at.

“We are paying at least a few hundred dollars extra per month then what we were a year ago.”

It’s not just Cairns locals feeling the pinch.

Jaspreet Singh of Melbourne, Sam Sher of Cairns City and Samandeep Kaur of Melbourne, at Muddy’s. Picture: Brendan Radke

Samandeep Kaur, a Melbourne mother visiting Cairns, said the hikes would result in her family paying hundreds of dollars more on their monthly repayments, completely outweighing the family budget. 

“Before we were paying around 2 per cent interest and now we are paying double that and another rise will see it jump again, which means on our monthly repayments we are going to feel a bigger shock,” she said. 

“It’s not even a few hundred dollars more. We will be paying somewhere between $500 and $600 extra, which is a large amount to pay.

“We are going to have to readjust our budgets for everything, including groceries, kids stuff, and all our household bills, and now we are going to be sacrificing our own things just so we can make our mortgage repayments and bills, which is hard.”

Owner of Cairns Mortgage Brokers Roger Ward expecting another rate rise to impact house prices. Picture: Brendan Radke

According to Roger Ward of Cairns Mortgage Brokers, the full impact of rate hikes would not be felt for some time. 

“It’s my expectation there will be another rate hike, I think it’ll be by 0.25 or 0.5 per cent,” he said. 

“Since the previous rate hike, it’s been confirmed by Core Logic that national house prices have declined. It’s an expected outcome, but the full force of the previous rate hikes won’t be felt for the next 30 to 60 days.” 

Originally published as Cairns homeowners tighten budgets with interest rates set to rise again