Gold Coast mortgage stress: What Reserve Bank’s interest rate decision means for struggling households

Under-pressure mortgage-holders have been given a reprieve, with the Reserve Bank holding the cash rate steady for the first time in 11 months in a move which will impact the property sector.

Under-pressure mortgage-holders have been given a reprieve, with the Reserve Bank holding the cash rate steady for the first time in 11 months.

The board of the Reserve Bank on Tuesday to leave the cash rate unchanged, leaving interest rates at 3.6 per cent.

It’s welcome news for more than 27,000 Gold Coast households which are facing severe mortgage stress after nearly a year of consecutive rates rise.

Inflation remains at 6.8 per cent.

Households with a $750,000 mortgage are paying $1474 more than they were in May 2022.

Philip Lowe, Governor, Reserve Bank of Australia. Picture: NCA NewsWire / Nikki Short

Reserve Bank Governor Philip Lowe said the decision to keep the cash rate on hold was made to “provide additional time to assess the impact of the increase in interest rates to date and the economic outlook”.

“The board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target,” he said.

“The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty. In assessing when and how much further interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.”

It’s been a tough year for households which have been hit by significant cost of living issues.

Data compiled by Melbourne-based firm Digital Finance Analytics (DFA) in March revealed the number of Gold Coast households facing mortgage stress had increased from 19,881 in February 2022 to 27,777.

It had jumped from 25,404 since January.

The postcodes with the highest proportion of struggling homeowners are 4216 and 4209, home to the expensive waterfront mega mansions of Sovereign Islands, Paradise Point and Runaway Bay, the rapidly growing suburbs of Coomera, Pimpama, Upper Coomera respectively.

Monthly mortgage repayments are expected to skyrocket mid-year for thousands of homeowners who took out mortgages at fixed rates in the past two years while the cash rate sat at record lows, with the fixed period coming to an end.

Ray White Surfers Paradise chairman Andrew Bell Supplied

Mortgage stress means homeowners are spending at least 30 per cent of their income on loans. Rental stress is defined the same way.

Gold Coast property figures have welcomed the news, saying it will take pressure off struggling people.

Ray White Surfers Paradise chairman Andrew Bell said it would take months for the true impact of the RBA’s measures to be known.

“This is a wise decision by the Reserve Bank board because there have been more than enough signals that the current ten interest rate rises have had the desired effect,” he said.

“There should be no further interest rate rises until additional information over the next few months are fully absorbed and analysed.”

Harcourts Coastal boss Dane Atherton said he did not believe the ten consecutive rate rises had had a serious impact on the property sector.

“While consumer spending has tightened and there has been a clear impact in this regard, I don’t think it has had a huge impact on property,” he said.

“We did $180m in sales in the past month which was really strong for us and we are at the point where homeowners have made the slight adjustment needed.

“Interest rate rises have been factored in by buyers in the market.”

Dane Atherton. Picture: Glenn Hampson

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Originally published as Gold Coast mortgage stress: What Reserve Bank’s interest rate decision means for struggling households