After a year of aggressive rate hikes and surging inflation, three in four Australians are worried about their financial future, according to new research from financial comparison site Mozo.com.au.
“We are starting to see the full effects of back-to-back interest rates rises and skyrocketing inflation, with the majority of Aussies now admitting they worry about their finances,” said Claire Frawley, personal finance expert at Mozo.
But what’s more concerning is that one in five Australians now say they are spending multiple hours a day worrying as we head into the festive season.
Inflation has surged to 7.3% annually – the highest growth in one year since 1990. Mozo research showed, meanwhile, that Aussies are just as stressed about grocery bills as they are about making repayments on a mortgage.
“Now is the time for people to really step back and cut waste out of their household budgets where possible, especially as end of the year creeps closer,” Frawley said.
The Reserve Bank of Australia (RBA) is tipped to lift the OCR by 25 basis points at its next meeting on Tuesday, taking the cash rate to 2.85%. If realised, and if the increase is passed onto borrowers with a $500,000 home loan, they could see their repayments become $776 more expensive than back in May.
Mozo.com.au calculated how a borrower’s monthly repayments would change if the 25bp is passed on.
|
Loan amount
|
May repayment
|
November repayment
|
Total increase
|
|
$400,000
|
$1,901
|
$2,521
|
$620
|
|
$500,000
|
$2,376
|
$2,152
|
$776
|
|
$600,000
|
$2,852
|
$3,782
|
$930
|
|
$800,000
|
$3,802
|
$5,043
|
$1,241
|
|
$1,000,000
|
$4,753
|
$6,303
|
$1,550
|
Note: Calculation for May repayment uses average variable interest rate 3.02%, November repayment calculation applies 2.75bp increase to May average. All calculations are for an 80% LVR owner-occupier loan for 25 years.
The average variable home loan rate now sits at 5.18%, which is 154 basis points above the lowest variable rate, which is currently 3.64% with Police Credit Union, Mozo.com.au said.
