Single dad describes mortgage stress as ‘social lockdown’

A single dad has compared mortgage stress to self-imposed “social lockdown” as households prepare for another interest rate hike.

A single dad struggling with ballooning monthly repayments has likened mortgage stress to self-imposed “social lockdown” as the Reserve Bank of Australia is poised for a ninth consecutive interest rate hike when it meets on Tuesday.

Melbourne father Steve Whittington told Today his monthly repayments would increase from $2100 in May to $3600, if Tuesday’s forecast 25 basis point increase was implemented.

“That is a massive rise for me,” he told host, Karl Stefanovic.

“Takeaway coffees are no longer a discretionary item that I am going near, never mind UberEats or a restaurant out. It’s almost like social lockdown, financially self-imposed.”

The Melbourne single dad said his monthly mortgage payment had increased from $2100 to $3600 in the past nine months. Picture: Today/ Channel 9

Mr Whittington called on the RBA to reconsider its approach as it attempts to bring down inflation, which rose to 7.8 per cent in December. A 25 basis point hike will bring the official cash rate from 3.1 per cent to 3.35 per cent; however, some economist say the RBA could impose as much as half a percentage point rise.

“The lag is so great surely someone has to be telling the RBA that there is a new paradigm and continued increases are hurting too many people too greatly,” he said.

AMP chief economist Craig Oliver said another quarter of a percentage point rise would add another $80 to the monthly payment on a typical $500,000 mortgage.

“(That) will take the total increase in monthly payments since April to $980 a month or nearly $12,000 a year. This will likely hit spending in the months ahead,” he said.

PropTrack’s director economic research Cameron Kusher said rates would be their highest since September 2012 if the RBA announces another hike.

“With borrowing costs continuing to rise and the subsequent reduction in borrowing capacities, property price falls are likely to continue and accelerate in 2023,” said Mr Kusher, who anticipates another rise of 25 basis points at March’s Reserve Bank board meeting.

“Thereafter, we expect rates to remain on hold, with the potential for them to be reduced in late 2023 or early 2024,” said Mr Kusher.

Householders are preparing themselves for another hike in interest rates. Picture: NCA NewsWire / Nicholas Eagar

Canstar Blue finance expert Steve Mickenbecker warns there is still a lot of financial pressure to come, forecasting at least another two more rate increases.

“I just don’t think anyone can really say there’s not more bad news for borrowers,” Mr Mickenbecker told NCA NewsWire.

“Living costs are going up irrespective, the CPI covers almost everything and they’re going up across the board.

“You pile that with mortgage rates, the reserve bank probably has at least another two increases of 2.5 per cent before it can decide to take its foot off the accelerator.”