Sydney couple with $840k mortgage fear ‘difficult’ financial impact of interest rate rise

A Sydney couple who pay $3400 a month for their mortgage, have been left reeling by the mammoth interest rate hike and predict things could get “difficult”.

Laura Tribolet and Shane Urquhart only moved into their new home in December but have been left feeling “really disappointed” as the young couple faces a potentially “difficult financial situation” as they are stung by interest rate rises.

The Reserve Bank of Australia took economists by surprise today by announcing a super-sized 0.5 per cent hike to the interest rate.

The official rate now stands at 0.85 per cent after being increased last month too, marking the first back-to-back rate rise in 12 years.

For the Sydney couple, who already pay $3400 a month on their mortgage, Ms Tribolet said the current increase would force them to change how they spend their money outside their mortgage payments as they expect the full 0.5 per cent hike to be passed on.

“That’s going to be a pretty massive increase to our repayments and I’m not feeling great about … It will mean at least $150 or $200 a month extra,” she told news.com.au

“That increase is quite shocking. I would not have assumed it would have gone up that much.”

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Laura Tribolet and Shane Urquhart have a mortgage of $843,000. Picture: Supplied

The pair, who have been together for six years, are currently paying off a mortgage worth $840,000 after building a four-bedroom, three-bathroom house in the north west suburb of Box Hill.

They had “hardcore” saved for five years to make their dream of owning a home a reality and

when it came to their mortgage, the couple opted for a variable rate as it offered a much better deal compared to fixed rate options, Ms Tribolet said.

While both earn “comfortable” incomes working as a nurse and metal fabricator, Ms Tribolet said she was worried about future increases that are predicted to hit in coming months, with

RBA governor Philip Lowe flagging that rates could hit as high as 2.5 per cent over time.

“Considering I wasn’t really expecting it to go up this much I am a little bit worried if it does go up anymore that it will be really difficult financially,” she said.

“I don’t think that amount right now makes us struggle but we will have to make sacrifices on things we enjoy.

“However, if it was to go up anymore that’s when it might be a bit more of a struggle and that’s when we might have to look at our budget and really tighten up things.”

The couple were excited to move into their new home in December. Picture: Supplied

Impact of the first increase in 12 years

After the RBA unleashed its first interest rate rise last month, sending it from a record low of 0.1 per cent up to 0.35 per cent, Ms Tribolet said the rate on their mortgage jumped from 2.1 per cent to 2.3 per cent, adding over $100 a month to their mortgage repayments.

The 27-year-old said the first rate hike left the couple feeling “frustrated” even though they could afford it.

“We were pretty annoyed just because the reason we went with that bank was because they were offering a lower rate and the rate was so good,” she said.

“That meant it was going to put a bit of extra bit of money in our pockets, to save for other things and to pay off the house as quick as we can and live our life.”

Now Ms Tribolet said they might have to consider refinancing and moving on to a fixed-rate mortgage, but overall the interest rate rises were another blow after a tough few years.

“Considering everything that’s happened over last couple of years for everyone, who has struggled in their own way financially and socially, this is another thorn in our side and it keeps kicking us while we are down,” she said.

A meeting with their mortgage broker will be the next step. Picture: Supplied

Historic hike

The last time the RBA increased the cash rate by more than the standard 0.25 per cent was in February 2000, when it upped the rate by 0.5 per cent.

In fact, an increase higher than 0.25 per cent has only happened four times since 1994.

Calculations by Compare the Market show a 0.5 per cent increase would add $203 to the monthly repayments on a loan of $750,000.

Mortgage broker Rebecca Jarrett-Dalton, founder of Two Red Shoes, advised there isn’t a lot that borrowers can do when it comes to interest rates rises other than cut discretionary spending.

“Borrowers should be mindful that their loans were assessed at higher interest rates and money is still cheap in the overall perspective – but we get that it is going to impact everyone’s budgets when they’re already feeling the increases in grocery and fuel bills,” she said.

Australian homeowners could see their mortgage repayments rise by hundreds with interest rate rises. Picture: Brendon Thorne/Getty Images

The number of Australians suffering “mortgage stress” is set to skyrocket with the second interest rate hike in just 35 days, with those who entered the market between November 2020 and May this year particularly impacted when rates sat at a record low of 0.1 per cent.

Almost one in three Aussies who are borrowing or renting say they won’t be able to afford housing costs if the Reserve Bank lifts the interest rate by as much as it is expected to in the coming months.

However, the surprise winners out of the rate rises could be first home buyers with experts predicting interest rates could drive property prices down 10 to 15 per cent by the end of 2023 or early 2024.

Originally published as Sydney couple with $840k mortgage fear ‘difficult’ financial impact of interest rate rise