Mortgage holders are feeling the pressure from the latest in a series of interest rate hikes from the Reserve Bank of Australia.
The RBA has raised the cash rate for the ninth consecutive month in an ongoing effort to combat high inflation rates, with the bank indicating that more hikes are likely to come.
Now sitting at 3.35 per cent, the cash rate is the highest it's been since 2012, raising fears that mortgage repayments may become unaffordable for many Australians.
However, experts are advising mortgage holders that if they aren't happy with the rates on their loan there may be options to refinance.
Sally Tindall, the Research Director for RateCity said it was a good idea to shop around with other banks who may be able to offer more affordable repayment rates on their loans.
[[“Refinancing is at a near record high, which means borrowers are switching in order to get a lower rate that is fantastic news, if you haven’t renegotiated your home loan recently or at least haggled with your bank now is the time to refinance.“]]
In his statement on Tuesday (7 Feb) RBA Governor Phillip Lowe, said "further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target."
However, some economists fear that this approach could risk pushing the Australian economy into a recession.
Shane Oliver, AMP Capital's Chief Economist told SBS 'On The Money' that inflation rates are likely to have already peaked and emerging evidence may see the R-B-A change course if economic growth is shown to have slowed as a result of their efforts.
"Just over a year ago they didn't expect interest rate hikes until 2024 at the earliest. So, their guidance and their statements is not necessarily the best guide to what will actually happen and I think we're going to see increasing evidence of slowing growth and slowing inflation over the months again which will put a brake on what the RBA is doing. So I think we're either at or close to the top and I think just blindly following other central banks will risk throwing the Australian economy into recession unnecessarily."
