Moreton Bay reacts to historic interest rate rise

Moreton Bay locals react to RBA's historic interest rate rise

By Nick Crockford & Matt Rodin

Following today's interest rate rise - the first in more than 11 years - Moreton Daily spoke to real estate and finance experts and a first homeowner about the likely impact.

The Reserve Bank of Australia (RBA) this afternoon announced a 25 basis point rise in Australia's interest rates to 35 basis points.

If the full rate rise is passed on by banks, it is estimated the increase will add $50 a month to repayments on a $500,000 mortgage.

In its statement the RBA judged "now was the right time to begin withdrawing some of the extraordinary monetary support put in place to help the Australian economy during the pandemic".

One to watch

Warner-based Ward Real Estate's Principle John Ward does not believe these rate rises will impact house prices in this region. “You’d like to think not”, he said.

However, when combined with rising costs of groceries and fuel he said: "It all adds up".

Mr Ward added the continued rise in domestic arrivals to Queensland's property market will continue to affect the supply of property, preventing a serious house price drop in the short term. 

First home buyer concerned with rising costs

Having never experienced an interest rate rise after purchasing her first home less than 12 months ago, Zoe (26) admits she is more worried about the rising costs of living impacting her ability to service her loan. 

"While I'm confident I can manage the currently forecast rate rises, I'm mainly concerned with the fact that my other costs like groceries and fuel are still going up," she said.

Is there anything we can do?

Jordan Sorbello, Finance Specialist at Strathpine-based Brisbane Home Loans said anyone with an existing mortgage can contact their lender to "see if they can offer a more competitive rate."

"If homeowners are concerned about the impact of further rate rises in the future, a Fixed Rate Home Loan may offer some relief as it will allow borrowers to keep the rate the same for between 1-5 years, depending on how long borrowers decide." 

"In all circumstances, we suggest contacting a Mortgage Broker who can review your current home loan to ensure it is competitive based on the offers available in the market. 

"We can also help borrowers understand and navigate the process of fixing their interest rates."

Why rates went up

In its statement today the RBA Board said: "The economy has proven to be resilient and inflation has picked up more quickly and to a higher level than was expected. 

"There is also evidence that wages growth is picking up.

"Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions."

Among the data used to make the decision, was unemployment falling to 4 per cent and labour force participation at a record high. Job vacancies and job ads are also high.

Inflation has also picked up more than expected. In the March quarter headline inflation was 5.1 per cent and in underlying terms 3.7 per cent, the RBA said in its statement.

These are forecast to rise further but fall back to around 3 per cent by mid 2024.

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