10% of Variable Rate Mortgage Holders Struggling to Make Ends Meet as RBA Raises Interest Rates

By GEOFF SMITH

The Reserve Bank of Australia’s (RBA) Governor, Philip Lowe, has recently been facing questioning by federal politicians about rising interest rates, infation and Australia’s cost of living crisis. With the RBA having lifted the offcial cash rate a record nine consecutive times since May to 3.35 per cent this month, this has resulted in soaring interest rates, with one-in-ten variable rate mortgage holders now being in fnancial stress.

The RBA has opted to aggressively raise rates in a bid to tame runaway infation, which reached 7.8 per cent in December, its highest since 1990. Despite this, Governor Lowe has conceded that the central bank “did too much” when it dropped the cash rate to just 0.10 per cent during the pandemic, and has since had to “backtrack”. At the same parliamentary hearing, RBA assistant governor Brad Jones highlighted the disparity between Australian households in terms of how much they are struggling with interest rates.

He revealed that about half of variablerate owner-occupiers are more than a year ahead on their mortgage payments, and a third more than