The RBA raised interest rates by another 50 basis points leaving homeowners in ‘unknown territory’

Australia is in “unknown territory” after the housing market declines at the quickest rate in almost 40 years, says a Far North industry leader. How the latest RBA spike affects homeowners and buyers.

A FAR North industry leader warns that Australia is in “unknown territory” as the housing market declines at the quickest rate in almost 40 years following another interest rate hike.

The Reserve Bank of Australia has upped the rates by 50 basis points to 2.35per cent as Roger Ward, owner of Cairns Mortgage Broker, said the aggressive increases would spell trouble for homeowners and mums and dads.

Mr Ward advised Far Northerners to review spending habits and their home loans as monthly mortgage repayments were set to rise.

“The rate hikes will eat straight into the disposable income they have,” he said.

“It’s been the fastest decline in the housing market since 1983.”

Director of Cairns Mortgage Brokers Roger Ward said the aggressive interest rate increases would spell trouble for homeowners and mums and dads. Picture: Anna Rogers

Prospective homeowners were another loser of the latest spike with growing hesitancy to enter the market, according to Mr Ward.

“People’s borrowing capacity have been declining rapidly since interest rates have gone up, they simply can’t get into the market,” he said.

Mr Ward said interests rates had risen faster than in previous cycles leaving us in “unknown territory”.

“When you increase interest rates you don’t find out what it’s done for the next three to six months — if you get it wrong, that can be a very bad problem,” he said.

Mr Ward said by Christmas, it would be evident that the economy had slowed down, as early indicators sounded the alarm that Australia was in a recession.

Mr Ward said that the RBA should pause the interest rate hikes. Picture: Brendan Radke

“The higher energy costs, the higher fuel costs compounded by supply chain problems caused by Covid — these things are all driving inflation and don’t have anything to do with Australian consumer spending,” he said.

“I think the RBA should pause and get a better handle on the effects of the interest rates.”

Edge Hill homeowner Lindsay McDonnell said while the increase would impact her current repayments she was still confident she could sell her home which is currently on the market.

“It will impact the monthly repayments but I don’t think it will impact me selling the house or the price hopefully as I think people are financially savvy and it is a massive house in Edge Hill so it will most likely attract families,” she said.

Property Shop sales agent Lance Richards said first home buyers would struggle the most and people needed to shop around to find the best interest rate that suited them.

Lance Richards of Property Shop said first home buyers would be the ones to hurt the most from the latest interest rate hike. Picture: Stewart McLean

“The thing to think about when getting into the market is what do I really need and it’s like a game of Monopoly you buy the cheap ones first but don’t panic you will have your chance to buy the big properties and motels later on,” he said.

“Many first home buyers over extend themselves and want the brand new four bed two bath which is now a minimum of $450,000, go and buy the second-hand place for $320,000 and you can still make it feel like home and save you stacks of money.

“I think if it is tight for you go and see your mortgage broker or bank man to see if you can sharpen the pencil and often they can and often you need to shop around and get yourself a cheaper rate. “

This is the fifth consecutive interest rate in 2022.

Originally published as The RBA raised interest rates by another 50 basis points leaving homeowners in ‘unknown territory’