The RBA has lifted interest rates to an 18-year-high, compounding the uncertainty Echuca’s real estate agents and finance brokers are increasingly seeing in their clients as a result of falling property prices.
Hold tight - we’re checking permissions before loading more content
Today’s decision to bump rates 0.25 per cent – the fifth hike this year – takes the cash rate to 4.85 per cent, with the increase adding an average of between $77 and $153 a month to repayments, depending on loan size, according to Canstar.
It’s a move which Jake Childs of Doolan Finance anticipates will continue the uncertainty and downturn of investment in housing he’s seen following the previous four rate rises and changes to tax and housing legislation.
Jake Childs is a finance broker with Doolan Finance.
Photo by
Supplied
“We’ve seen inquiries for home purchases drop significantly since the start of the year,” he said.
“Most of our inquires at the moment are people asking if they're getting a good deal with their current bank or if there are better options out there.”
Charles L. King & Co. director and auctioneer Troy O’Brien has seen similar movements in the housing market, crediting them predominantly to government policy rather than rate rises.
“We’re fortunate in Echuca our level of borrowing is not as high as it is in the city, so a rate rise doesn’t have as much impact as I suppose it may in some other areas,” he said.
“From a renter’s point of view however, the rate rise probably means when landlords are reassessing their returns they’re saying ‘well it’s going to cost me a bit more money to have a rental property, do I need to push my rent up a little bit higher?’
“And with low availability, they get the opportunity to do so because there’s a lot of demand.”
Mr O’Brien said some rental tenants without a mortgage may not understand why or how a rate rise impacted them.
Troy O'Brien is the director of Charles L King & Co. First National Real Estate in Echuca
Photo by
Aidan Briggs
“As I said, rental increases are often a response to the increased cost of having the rental property, which landlords are always going to look to recover,” he said.
Liberty network adviser and mortgage broker Ruth Middleton, who’s clients span Echuca and Bendigo, has seen those rental pressures compounded by a decrease in supply.
Ruth Middleton (right) works with her daughter Jessica Thorpe as advisers with Liberty Financial.
Photo by
Supplied
“I’ve found a lot of investors have sold their property,” she said.
“People have had to cut back on everything, they’re struggling with petrol, the cost of living, and eventually something has to give.
“The last two rate rises in particular have been really difficult.
“After them ‒ and I suspect after today ‒ I noticed a lot more people calling us asking what they can do to offset the increases to their monthly payments.”
Ms Middleton said in her nearly 23 years in the industry she couldn’t remember a situation like this.
“It’s probably the worst I’ve ever seen the mortgage and finance industry with mortgage stress,” she said.
“That being said, we’re here to help people however we can.
“Obviously, this is all general advice and everyone’s situation is unique, but if people are struggling, we can go through budgets and see if there’s something we can do and we can contact banks to try and get better pricing to mitigate some of the impacts of rate rises.”
Members of the RBA’s board were split on Tuesday’s decision, voting six to three to raise rates.
The RBA anticipates inflation will remain above 3 per cent for much of next year.
