Australia: Increase in mortgage interest repayments is at its fastest in 7 years

While the Reserve Bank of Australia has continued maintaining the cash rate at the same level for the last 16 months, data from the Australian Bureau of Statistics(ABS) shows that the cost of mortgage interest repayments for employed Australians has risen by 4.5 percent since December 2017.

This is almost double the inflation rate, with a rate of increase that is the fastest in 7 years.

There has been an average increase of about 40 basis points in investor mortgage rates because of new capital requirements from lenders, resulting in a declining demand for investment properties.

"This is almost double the inflation rate, with a rate of increase that is the fastest in 7 years."

However, Tim Lawless, CoreLogic’s head of research, expects demand in the housing market to continue being reinforced by low mortgage rates and high population growth.

RFi Group data shows that 46% of property owners consider the ability to switch from variable to fixed rates to be highly important, while only 39% consider splitting between fixed and variable rates to be important.

Canstar Group Executive Financial Services Steve Mickenbecker stated that fixed rates are increasing in popularity compared to two years ago, with ABS data showing that proportion of fixed-rate loans has increased by 4.4 percent to 15.8 percent of total loans.

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