Winners and losers of interest rate hikes as April decision looms

An unlikely loser has emerged as the RBA’s aggressive interest rate policy has slammed Aussies with 10 consecutive rate rises.

After 10 consecutive interest rate rises by the Reserve Bank of Australia (RBA), an unlikely loser has emerged.

While mortgage holders have been hit hard since May last year when the RBA began hiking the official cash rate, there has been one group of Australians who have so far managed to weather the storm - the adult children of rich people.

That’s changing though, experts have warned.

According to a new CPA Australia poll, the “bank of mum and dad” is drying up as parents focus on their own bills amid rampant inflation and the cost of living crisis.

That means their children are finding it harder than ever to score a home, with many priced out of the market.

CPA Australia senior manager business and investment policy Gavan Ord said, like traditional banks, the bank of mum and dad has tightened its lending policies.

One in five people can no longer rely on family for a loan, and 80 per cent of people said it’s difficult to get any money from their parents.

“The bank of mum and dad is increasingly not an option for many Australians,” Mr Ord said.

“Parents are finding it tougher to help their children financially. Almost half of respondents [48 per cent] said the bank of mum and dad has already closed or is lending less.”

It comes as Australians are bracing for the RBA board meeting on Tuesday afternoon where interest rates could be hiked yet again. But in good news for homeowners around the country, Economists think a pause will be likely this time around.

The RBA is predicted to pause the interest rate when it meets today. Picture: NCA NewsWire/Joel Carrett

Other people have also lost out, according to James Algar, a broker from Mortgage Choice.

“The other [people losing out] are the people who bought at the peak,” he told news.com.au.

“Almost without exception, they signed themselves into a fixed rate. That is running out. “They’re about to come out into an environment where they’re paying a lot more.”

In particular, new entrants into the property market when it was at its peak in 2021, especially homeowners who bought between August and November that year, are likely regretting their choices now.

He also warned that single people looking to buy property were also in a bad situation. With wage growth stagnant and borrowing capacity shrivelling up, couples are in a much stronger position to buy.

Accordingly, single-income homes, especially those with children, are finding times particularly tough at the moment.

In contrast, partnered up property buyers are some the few enjoying the windfalls from the market’s turbulent conditions.

RBA governor Philip Lowe has hinted that a reprieve might be on the horizon for homeowners. Picture: NCA NewsWire/Nikki Short

“A range of first homebuyers in the past six months had tapped out,” Mr Algar said, “but now they’ve bought a two-bedder for $800,000 rather than $1 million.

“They weren’t heavily impacted by the reduction in borrowing capacity.”

He said this was especially the case for couples.

“People buying together, especially first homebuyers, with all the other incentives, they’re definitely cheering a bit at the moment,” he said.

He had one client who renewed their pre-approval five times as they struggled to find a house. But this year, they’ve snapped up their dream home for less than it was at the peak of the property boom.

“They said they were so glad they didn’t buy a year ago,” Mr Algar said.

The other winning faction with the property market, as it currently stands, are families who have managed to upgrade their homes.

“That lower end of the market is where I’ve more seen people doing well,” he said.

“There are still families who’ve managed to trade out of a townhouse … people are making the move from a townhouse to a detached home.”