On Wednesday April 4, the Reserve Bank of Australia (RBA) decided leave the official cash rate on hold at 6.25%, saving homeowners the much anticipated 0.25% increase in variable mortgage rates. Many analysts are tipping the RBA is waiting on official March inflation rates before deciding on any increase and believe an increase is likely in May.
www.news.com.au stated that Higher rates are forcing people into financial hardship with a survey by NEWS.com.au and Coredata released today revealing almost one in three Australians would be forced to sell their home if interest rates rose by 1 per cent.
Furthermore, Of property investors, 44 per cent said a 1 per cent rate rise would force them to sell their properties as mortgage costs got too much to service.
Take the following mortgage and see what happens when interest rates increase:
Current situation
Loan amount$400,000
Interest rate7.99%
Loan term25 years
Weekly minimum repayment$711
Total interest payable over 25 years$524,642
0.25% interest rate rise
– Weekly minimum repayments will increase to $727
– Total interest payable over 25 years...
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