Mortgage repayments could be up $1000 a month by March as interest rate rises, inflation bite

Another round of interest rate rises are set to put even more pressure on struggling families, with home owners facing paying $1000 more in repayments in March from April last year. But that’s not all that’s costing people more.

Homeowners are set to be slugged with higher mortgage repayments, as economists are predicting two more interest rate hikes in the next two months as inflation continues to rise.

While Treasurer Jim Chalmers acknowledged that there were “extreme price pressures” on Australians and said while he hoped soaring inflation now peaked, it was still set to remain higher for longer in the coming year.

It means prices of grocery staples are set to continue to rise, even after consumers were hit with price surges in the double figures over 2022, adding to how much it costs to feed the family.

The cost of mortgage repayments are going up significantly. Picture: NCA NewsWire / Nicholas Eagar

Two rate hikes of 0.25 per cent would mean a person with a $500,000 mortgage would pay $968 a month more than they were in April last year.

Brisbane’s inflation rose by 7.7 per cent, over the year to December, almost on par with the national rate of 7.8 per cent, based on Australian Bureau of Statistics data released on Wednesday.

The cost for Queenslanders to take a holiday rose by a record 22 per cent, in terms of how much they are paying for travel and accommodation even within Australia.

Key stand outs in price rises over 2022 for Brisbane included:

* Bread up 13.6 per cent

* Milk up 16.6 per cent

* Breakfast cereal up 15 per cent

* Cheese up 14.6 per cent

* Fruit up 12.9 per cent

* Tea and coffee up 11.9 per cent

* Fuel up 13.9 per cent

Westpac Business Bank chief economist Besa Deda said Wednesday’s figures shortened the odds that interest rates would rise in February, with further rises in March and May also on the cards.

“The inflation story leaves the Reserve Bank with little choice but to hike in February and again later in the year,” Ms Deda said.

“We believe the cash rate will peak in the first half of this year at 3.85 per cent and then they will hold it steady.”

She said while inflation was expected to moderate over the year, there were some concerning signs in the data including the cost of goods only slowly slightly and the cost of services – including holidays – continuing to rise.

“We’re not out of the woods with inflation,” Ms Deda said.

“The longer it stays high, the greater the risk it becomes entrenched. It makes it easier for businesses to put up prices.”

Westpac Business Bank chief economist Besa Deda. Picture: Supplied

Commonwealth Bank head of economics Gareth Aird said he expected the Reserve Bank of Australia to increase rates by 0.25 per cent to 3.35 per cent in February but that inflation pressures were starting to ease.

“Notwithstanding, the risk sits with a further rate hike at the March Board meeting,” he said.

Queensland Tourism Industry Council CEO Brett Fraser said that a culmination of factors led to a rise in travel and accommodation costs.

“The rising cost of living is a global issue and it’s not only Queenslanders who are paying more for a getaway,” Mr Fraser said.

“A combination of high inflation, increased operating costs and unparalleled demand, are all contributing to the higher holiday prices.

“We’re hearing reports from operators that forward bookings are softening. As demand eases, holiday-makers and day-trippers will start to see the costs of their vacations and outings drop,” said Fraser.

Treasurer Jim Chalmers. Picture: NCA NewsWire / Gary Ramage

Mr Chalmers said the government was providing cost of living relief, including through cheaper child care and medicine measures from October’s budget, while electricity price relief would be a centrepiece of his second budget in May.

“We are realistic about the extreme price pressures that Australians are feeling right now,” Mr Chalmers said.

“The impact of interest rate hikes and the cost and consequences of a war in Europe and a period of substantial volatility in the global economy as well.

“Our expectation and our hope is that inflation has peaked, but it will still be higher than we’d like for longer than we’d like even on the other side of the peak of inflation.”

Opposition treasury spokesman Angus Taylor said Australians were feeling the impact of inflation in the grocery bills, electricity costs and school expenses.

“Now it is no plan for inflation to just watch it go up. But that’s exactly what we’re seeing from this Labor Government. A complete absence of a plan,” he said.