Soaring rates show no mercy

HIKES in home loan rates will not only exacerbate housing affordability, but add fuel to the fire that is the soaring rental market.

Soaring rates show no mercy

RENTERS and home-owners will feel more pain as Australia's biggest lender thumbed its nose at the Government and raised standard variable home loan rates by 0.35 percentage points.

The Commonwealth Bank's rise is 0.10 percentage points more than last week's official cash rate announcement, making a CBA home loan 9.32 per cent .

CBA head of retail banking services Ross McEwan blamed the volatility of global markets for the rise, which echoed moves by Westpac and National Australia Bank to pass on increases above the Reserve Bank rate.

The news comes as Credit Union Australia announced it would stop using mortgage brokers, and instead cut deals through its branches.

The rise will not only exacerbate housing affordability, but adds fuel to the fire that is the soaring rental market.

Various community centres contacted by The Courier-Mail expressed concern for single parents, pensioners and low-income earners renting a dwindling supply of properties.

They said the financial criteria applied by most property managers - that applicants must earn about three times the cost of rent - was now too high as rents skyrocketed.

"And more people have been failing the test, particularly in the past nine to 12 months,'' Brisbane south tenancy adviser Lorraine Bakon said.

Melissa Jones and her two sons faced eviction from their River Hills home today after the single mother had rental applications denied by more than 10 property managers. 

The distressed mother - who receives pensions and rental assistance totalling $450 a week - said she was turned down over  "ill-founded'' concerns about her payment history and her failure to meet the income-to-payments criteria.

"I'm out on the streets tomorrow (today),'' she said. "(Property managers) don't care about your situation. All they care about is if you earn three times your rent. If you're like me you don't stand a chance.''

Other fixed-income earners were being priced out of the market or forced to slash already modest food budgets.

Queensland Shelter executive officer Adrian Pisarski said the situation was now so bad even those with moderate to average incomes were struggling to meet the criteria.

"The rental housing crisis no longer just applies to low-income workers,'' Mr Pisarski said.

"People are being forced into situations they never would have considered.''

"Economists and the governments have misread the situation and failed to see it coming,'' Mr Pisarski said.