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Interest rate hikes cost Australians extra $38,000 for average size home loan since increases began in 2022

Some struggling home-owners have sold their properties after rising interest rates piled an extra $38,000 interest on to the average loan since 2022. Research commissioned by The West Australian shows those with the average-sized variable loan of $433,000 have paid a total of $65,000 in interest since the first rate hike in May 2022. Mortgage comparison site Finder crunched the numbers to reveal $38,000 of that amount was as a result of the 13 interest rate rises, causing a 140 per cent blow-out in total repayments. If that extra amount were spread out equally, it would be equivalent to an extra $1245 every month, $285 every week, or $40 for each and every one of the 935 days since the Reserve Bank announced its first cash rate hike in May 2022. The shocking increase — which excludes principal repayments — has hit many families hard, including Samantha Reece, who sold her North Coogee apartment in March this year. Now renting in Cottesloe, Ms Reece said her decision to sell was due to a combination of high interest rates and cost-of-living pressures. “For the sake of making sure that I was able to provide for my kids, selling the apartment was not a tough decision,” she said. Ms Reece was able to meet her loan obligations — which jumped from $3100 a month in 2020 to $4700 a month this year — but felt the personal toll was too high. She had worried about the impact the mortgage stress was having on her two children after she was forced to seek financial assistance to send her son on a school camp. While Ms Reece makes a living representing unit owners as the managing director of Australian Apartment Advocacy, she said selling was ultimately the right decision. “When you are paying money on a mortgage, you have to think of the cost in terms of what you are losing in experiences with your family,” she said. Ms Reece said the mortgage stress had affected her mental health, and she was relieved to be back in a position to help her children, which includes recently buying her son a car required for his apprenticeship. “Do I regret selling? Yes,” she said. “But did it help me take back my life? Yes.” She hopes to eventually buy another home when the circumstances are right. PropTrack economist Cameron Kusher said Ms Reece was far from alone, claiming a surge in new property listings for sale was partly fuelled by the rate hikes. New listings in WA in October were up 28 per cent compared to the same month last year. Mr Kusher said interest rate relief was likely to be smaller and further away than many had expected. “Many households were anticipating interest rate relief this year with several interest rate cuts to follow in early 2025,” he said. “It is now looking as if rate cuts won’t occur until the middle of 2025 and there will be fewer cuts overall,” he said. Finder home loans expert Richard Whitten said inflation had only just fallen within the Reserve Bank of Australia’s two to three per cent target range. “It will take a bit more data before the RBA is comfortable that inflation is really under control,” he said. But mortgagors can find some relief through refinancing, according to Canstar data insight director Sally Tindall. Canstar research shows those who refinanced from 7.11 per cent interest to 6 per cent in December 2023 would have since saved $3255 on a $300,000 loan and $5375 on a $500,000 loan. Those with a $750,000 mortgage would have saved a whopping $8063. Ms Tyndall said 983,000 loans across Australia had been refinanced since 2022. She said those who cannot refinance should attempt to get an interest rate reduction by calling their bank and requesting one. Mortgagors should present themselves as “a genuine flight risk” by getting quotes for lower interest from two other lenders before making the call. She said they should highlight their loyalty when seeking to get the same honeymoon rate offered to new customers “The average variable interest rate across Australia right now is 6.34 per cent,” she said. “This is one time you want to be below average,” she said.

The West Australian exclusiveInterest rate hikes cost Australians extra $38,000 for average size home loan since increases began in 2022

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Interest rate hikes cost Australians extra $38,000 for average size home loan since increases began in 2022