Financial markets are betting on a significant chance that the Reserve Bank of Australia (RBA) will raise the cash rate again in November. If this happens, the average mortgage interest rate could climb to around 6.75%. Even if the RBA holds off in November, markets expect another rate hike later, and nearly half of economists surveyed by the Australian Financial Review agree.
Analysis by REA Group reveals that if rates rise again, repayments on a median-priced home would consume 37.4% of a typical household’s income. This is just below the record high of 37.5% set in December 1989, signaling growing mortgage stress, especially for first-time homebuyers.