‘Not a rounding error’: RBA move to wipe $58k off loans
New analysis indicates that potential Reserve Bank of Australia interest rate hikes could significantly reduce borrowing capacity for home buyers. South Australia is identified as particularly vulnerable due to high mortgage growth relative to average wages.
Why it matters
This highlights the growing financial strain on Australian households and the potential cooling effect on the national real estate market.
A fourth rate hike could deliver a brutal new blow to battered home buyers, but South Australians may be hit hardest on the mainland where borrowers have stretched further and faster than almost anywhere else.
New Canstar analysis shows a buyer on the average full-time wage of $108,650 would be able to borrow about $11,200 less if the Reserve Bank lifts the cash rate again on Tuesday.
For a typical borrower, that would take the total reduction in borrowing capacity to $47,400 this year, or about 9 per cent, based on an owner-occupier with no other debts, no dependants and minimal expenses.
While Tasmania is tipped to wear the biggest hit nationally, South Australia stands out as the mainland state under the most pressure, with the lowest average mainland wage at $102,732 and borrowers already carrying sharply larger mortgages than they were just a few years ago.
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