‘Mammoth’ mortgage hikes hit as fixed rates expire: Lendi Group

Borrowers in NSW are currently being hit with the highest monthly increases at $1,708, followed by Victoria ($1,421), ACT ($1,395) and Queensland ($1,237).

On a national basis, the average monthly repayment now sits at $3,865 according to the group, which is up $1,387 when compared to repayments on a 2 per cent interest rate, which now averages 6.27 per cent.

However, the group revealed that around one in five (21 per cent) of mortgagors are yet to roll off their low fixed rate terms.

State by state, NSW had the highest percentage of borrowers still on these fixed-rate terms at 22.7 per cent, followed by Queensland at 22 per cent, ACT at 21.35 per cent, Northern Territory at 20.5 per cent, and Tasmania at 17 per cent.

Lendi Group chief executive and co-founder Dave Hyman said the repercussions of the fixed-rate cliff have already started flowing through the economy.

“The Reserve Bank’s decision to hold interest rates for a second month is welcome news, however our data reveals, despite the hold, the vast majority of Australians are already living with enormous increases in their monthly repayments,” Mr Hyman stated.

“With interest rates unlikely to materially decrease soon, we know the clock is ticking for two in 10 home owners who are yet to bear the full brunt of the rate hikes.

“As rates remain sticky, we will likely see more hurt in the housing market, particularly among those single home owners, families on a low or single income and investors who hold more than one property.”

Mr Hyman added that research conducted by Aussie Home Loans, which surveyed 1,000 mortgagors between 25 and 55 in mid-June of this year, found that 29 per cent of home owners are struggling to meet repayments and 23 per cent are using more than 50 per cent of their total household income to service their mortgages.

Fixed rates surge in June

As fixed-rate loans from the pandemic era began to roll off in June 2023, recent data from the Australian Bureau of Statistics (ABS) found that new fixed-rate loan commitments recorded a 70.8 per cent increase in the same month.

Despite this, ABS data indicated that fixed-rate loan commitments still remained below the $26 billion recorded in June 2021 when interest rates sat at emergency levels of 0.1 per cent.

The surge followed the RBA’s aggressive tightening cycle that saw the official cash rate rise by 400 bps, which likely led to borrowers locking into higher rates above 6 per cent as economic conditions remained uncertain.

However, the RBA has held the cash rate steady for two consecutive months, following August’s pause, suggesting that the peak in interest rates could be on the horizon.

[RELATED: Fixed-rate commitments jumped 70% in June: ABS]