Commentary
Home buyers and businesses are suffering sticker shock as the Reserve Bank of Australia (RBA) lifted the official cash rate from 0.1 percent to 3.35 percent in the course of the nine months since April 2022. But they should probably be thinking of rates of this level as the “new normal.”
Assuming lenders pass the whole rate increase, payments on the average floating rate home loan of $599,992 (US$416,000) have increased by $19,499.74 per annum.
If the mortgage is being paid by a couple, each earning average income, then repayments go from 28 percent of before-tax income, to 39 percent. On an after-tax basis, this is 35 percent to 49 percent….