Pop Goes Those Fixed Rate Mortgages...

Описание: Given what I have been highlighting about the pivot in interest rate expectations, following the last RBA presser and the flow of economic data, plus the current market expectations of around 4% cash rates in June 2027, yes June 2027, it should surprise no one that fixed rate mortgages are on the rise.

The largest Australian lender CBA just lifted its fixed rates by up to 0.70 percentage points – the same as if the Reserve Bank hiked three times in a row, or in other words, back to peaks seen before the recent rate cut cycle.
This will be of concern to households who are leveraged up, thanks to poor housing affordability and big mortgages, as I discussed on my live show on Tuesday. We know there are still some households enjoying low fixed rates, but who are up for renewal soon, and when they switch they will be adding hundreds to the cost of a typical mortgage repayment.

More broadly in cements the expectation of higher cash rates ahead, so even variable rate mortgage holders should be concerned. Lets be clear there is not going to be a low rate cut path acting as a get out of jail card for many households.

So now the real question emerges. How will higher borrowing costs in the months ahead play out from home prices? We know that for many households cost-of-living concerns continued to squeeze their budgets, yet demand remains robust and Government incentives are driving some first-time buyers into the market. In Sydney, for example, the median house price had pushed towards the $2 million mark. The numbers were equally eye-watering for the rest of the country: the median value of a home reached almost eight times the average annual income. Plain stupid.

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