Mortgage holders are being confronted with the highest interest rates in over 10 years after the Reserve Bank hiked the official cash rate another 0.25 per cent this week.
In sobering news, if anything, the RBA governor Philip Lowe took an even harder stance, indicating several more rate hikes were likely over the coming months.
It has prompted sections of the community to urge the RBA to stop and take a breath while it actually assesses the impact of nine rate hikes in a row.
RateCity has crunched the numbers and have revealed that homeowners with an average mortgage of around $750,000 are having to stump up an extra $1,362 a month more than they were back in May.
RBA governor Philip Lowe pulled no punches after the rate hike announcement.
“Further increases in interest rates will be needed over the months ahead,” he said.
“If high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later.
“High inflation makes life difficult for people and damages the functioning of the economy.”
While he did acknowledge there were a lot of families set to come off fixed interest rates this year, it wasn’t enough to provide certainty for the RBA that household spending would be reined in enough to combat rising inflation.
“Some households have significant savings buffers, but others are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living,’ Mr Lowe said.
“Household budgets are also being affected by the decline in housing prices.”
The Australian Council of Trade Unions are not happy with another rate rise this month, arguing it is workers who are having to carry the load of fixing inflation.
“The RBA has almost pushed Australian workers and the economy off a cliff,” ACTU president Michele O’Neil said.
“In a painful irony, the greatest cost of living pressure on too many Australian workers I snow their mortgage repayments thanks to RBA rate rises.”
Amid growing unrest in the community, there are plenty of eyes watching to see whether the RBA governor’s term is extended when it expires in September.