Australia's Homeowners Face Highest Interest Rates Since 2011

Homeowners in Australia are bracing for their highest interest rates since 2011 as the Reserve Bank of Australia (RBA) prepares to announce its decision on a cash rate hike. The RBA's move could take the cash rate above its previous highs, which were seen during the 2022-2023 hikes.

According to Canstar data insights director Sally Tindall, the total value of residential mortgages has risen by 138% since 2011, mainly due to soaring property prices. The current total is $2.51 trillion, up from $1.05 trillion in 2011.

A 0.25 percentage point increase would add $91 a month to the monthly repayments for a borrower with a $600,000 loan and 25 years remaining at the start of this year's hikes. This is on top of the cumulative impact of previous rate rises, which could see borrowers paying an extra $364 a month compared to their original payments.

Industry experts are predicting further rate rises will lead to greater falls in housing prices, citing the 'stickiness' of inflation as a key factor informing the RBA's decision. While some economists surveyed by Finder predicted a rise, others disagreed, with Housing Industry Australia chief economist Tim Reardon forecasting that the RBA will hold rates.