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Families are already feeling the squeeze as a \u201chidden\u201d rate hit from petrol and living costs bites ahead of the next RBA decision.<\/p>\n
Families have already been hit with the equivalent of a \u201chidden\u201d interest rate rise as petrol prices and living costs crush household budgets ahead of the next Reserve Bank decision.<\/p>\n
Compare the Market economic director David Koch said higher fuel costs were effectively doing the Reserve Bank\u2019s work for it, tightening finances before any official move.<\/p>\n
\u201cBecause that interest rate increase, or the equivalent, has already come through in higher petrol prices, I reckon they might hold the line,\u201d Mr Koch said. Hidden $517 bill trap hitting Victorian homes<\/a><\/p>\n How AI property advice could lead to dud investment<\/a><\/p>\n He warned against adding further pressure to households already cutting back spending.<\/p>\n \u201cConsumer confidence has plunged and business confidence has fallen to almost record lows,\u201d Mr Koch said.<\/p>\n \u201cThe Reserve Bank doesn\u2019t want to crush consumers and businesses with another interest rate increase.\u201d<\/p>\n A single 0.25 percentage point rate rise would add about $157 a month to repayments on a $1m loan, according to Compare the Market, rising to more than $600 if rates climb by a full percentage point.<\/p>\n Mr Koch said the central bank would also weigh global oil prices and the upcoming federal budget, with any easing in geopolitical tensions likely to reduce inflation pressure.<\/p>\n RBA Governor Michelle Bullock faces mounting pressure as households warn another rate rise could push budgets to breaking point. Picture: NewsWire \/ Gaye Gerard<\/p>\n Frame Finance director Imogen Alexy said households were already feeling the squeeze, with some turning to short-term tactics to stay afloat.<\/p>\n \u201cWe are seeing a lot more debt consolidation just to alleviate pressure at the moment,\u201d she said.<\/p>\n \u201cThis can hurt people in the long run by adding additional interest, but it\u2019s a sign people are feeling the pinch and trying to get their expenses down as much as possible.\u201d<\/p>\n Frame Finance director Imogen Alexy says borrowers are consolidating debt and cutting spending as cost-of-living pressures intensify.<\/p>\n Ms Alexy said while most borrowers were still keeping up with repayments, the real stress point had not yet fully hit.<\/p>\n \u201cI haven\u2019t seen too many people fall behind just yet,\u201d she said.<\/p>\n \u201cIt takes quite a few months for the impacts to really be felt. People will struggle, cut back, and then eventually get to that point of desperation where they\u2019re falling behind on repayments.\u201d<\/p>\n She said rising living costs were already acting like a de facto rate rise, or a \u201chidden rate rise\u201d, forcing households to rein in spending and build buffers.<\/p>\n Soaring petrol prices are acting like a \u201chidden\u201d rate hike, quietly draining household budgets before any official RBA move. Picture: NewsWire \/ Luis Enrique Ascui<\/p>\n \u201cPeople have been a lot more conscious about how much they\u2019re driving, taking public transport where they can, and making sure their spending is more in check,\u201d she said.<\/p>\n \u201cAbsolutely. The general increasing cost of living has seen people\u2019s discretionary spending reduced.\u201d<\/p>\n Banks are expected to pass on any rate rise in full, adding hundreds to monthly repayments for many mortgage holders. Picture: NewsWire \/ Gaye Gerard<\/p>\n Ms Alexy said any further rate rise would hit entry-level borrowers hardest as borrowing capacity continues to shrink.<\/p>\n \u201cAt the lower end people are starting to feel more of an impact on what they can afford to buy,\u201d she said.<\/p>\n \u201cBecause it\u2019s their first mortgage a lot of the time, they\u2019re a bit nervous and want to wait.\u201d<\/p>\n She urged borrowers to act early to protect themselves ahead of any further increases.<\/p>\n \u201cI always recommend people accumulate as much additional funds as they can into their offset accounts if they have spare cash,\u201d she said.<\/p>\n \u201cA conversation with your broker or bank can save you thousands, literally.\u201d<\/p>\n Sign up to the Herald Sun Weekly Real Estate Update. Click here <\/a>to get the latest Victorian property market news delivered direct to your inbox.<\/p>\n MORE: Portelli slams Jacinta Allan over cheap petrol chaos<\/a><\/p>\n \u2018Baffling\u2019: $125k paid for shack you can\u2019t live in<\/a><\/p>\n
RELATED: \u2018Baffling\u2019: $125k paid for shack you can\u2019t live in<\/a><\/p>\n<\/p>\n
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