What rate rises could cost homeowners in every Qld suburb
Owners in almost 400 suburbs in Queensland will have to find more than $500 a month to pay their mortgage if rates rise 2 per cent. SEARCH YOUR SUBURB
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Homeowners in almost 400 suburbs across Queensland may have to find more than $500 a month to pay their mortgage if the official cash rate hits 2 percentage points – a forecast not out of the question if inflation is not brought under control.
Analysis by PropTrack has revealed there are 377 suburbs across the state where a 2 per cent rise will drain more than $500 from the monthly budget, with a staggering 106 suburbs facing the prospect of finding an extra $1000-plus a month.
That is equivalent to a new iPad for school ($500), the weekly rent in Surfers Paradise ($750) or a new fridge ($1000).
It comes after the Reserve Bank of Australia (RBA) lifted the official cash rate from 0.1 to 0.35 per cent on Tuesday, the first increase in 11 years, with experts divided on just how high it will go.
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PropTrack economist Angus Moore said Queensland had seen a record number of cashed-up interstate buyers move to the state during the pandemic, forcing locals to compete at higher prices.
He said that while recent purchasers were likely to earn more than a suburbs average income, which includes young workers and retirees, the number gave a sense of just how hard it would be for an average local to buy a home in the suburb.
Top of the list is Sunshine Beach, where the median dwelling price (houses and units) soared 45 per cent to $2.15 million, with a record $34 million beach house sale in the suburb.
There the average income is $74,900, albeit the suburb is home to everyone from baristas to billionaires.
The average monthly mortgage repayment is $6730 based on an assumed interest rate of 2.43 per cent, but that could increase by $920 if the official cash rate rises to 1 per cent.
That means a two-income household would need to fork out a further 7.4 per cent of their disposable income, increasing to 15.3 per cent if the RBA lifts to 2 per cent.
Five of the top 10 Queensland suburbs that could feel the most mortgage pain are on the Sunshine Coast, where property values soared between 37.1 per cent (Twin Waters) and 58 per cent (Doonan).
On the Gold Coast, the most vulnerable suburbs are Tallebudgera Valley, Tallai, Currumbin Valley and Broadbeach Waters, with a 2 per cent rate rise draining up to $1420 a month from the budget.
In Brisbane, homeowners in Robertson, which has a median dwelling price of $1.28 million, up 36.7 per cent, will see repayments rise the most – up $550 (1%) and $1130 (2%).
There, the average individual income is $51,300 meaning a two-earner household will be confronted with a 13.2 per cent impact on their disposable income if rates rise 2 per cent.
Up north, a 2 per cent rise in Townsville’s most expensive suburb, Castle Hill, will knock 7 per cent out of the household budget, or around $920 a month, while a 1 per cent increase will cost around $440 a month.
In the Cairns region, the median house price in Palm Cove is $850,000, with a 2 per cent rise equating to an extra $760 a month.
On the flip side, the suburbs where borrowers are sitting pretty are also among the state’s cheapest, with buyers in Tara facing a monthly increase of just $90, or 1.2 per cent of income.
In Dysart, where the median dwelling price is $140,000 but the average income is $93,800, a 2 per cent rate hike will affect just 0.8 per cent of income.
It is a similar story in Collinsville and Blackwater, suburbs where resource wages are high but values tanked after the mining downturn.
In Brisbane, homeowners on Russell Island are in the best shape to meet a 2 per cent rise.
On Thursday, Moody’s Investor Service warned that mortgage delinquency rates would increase moderately over 2022 because of rising interest rates and slowing property prices.
“Interest rate rises will pose the most risk for mortgages with high balances and for those whose repayment amounts are close to borrowers’ maximum repayment capacity,” Moody’s vice president and senior credit officer Alena Chen said.
A recent survey by Money.com.au also revealed that 24 per cent of Queenslanders had no savings buffer to counter rate rises, while 22 per cent had less than $5000.
But Mr Moore said that smart buyers would have made the most of the record low rates and paid ahead of their mortgage schedule.
He added that loan providers would also have factored in a buyers ability to pay above the current rate.
“While price growth is continuing in Queensland, the momentum is coming out of that and it is entirely possible that we will see values decline in some places,” he said.
That means some homeowners face the prospect of paying off a home that might be worth less than their mortgage, he said.
“Remember, it is a long game,” he said.
Place CEO Damian Hackett said the rate rise was expected, and designed to curb the rampant demand for property.
“It was the appropriate action at the right time and it means Brisbane’s growth levels will come back to a more sustainable level,” he said.
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