Mortgage stress: Prepare for impact
In many markets globally we have seen rapid rate rises as central banks attempt to curb inflation. Although markets like New Zealand, Canada, the US, and the UK have been somewhat insulated from the immediate impacts of rate rises given the much higher proportion of mortgages on fixed rates in these markets, already we are seeing indications of what is to come.
In many markets globally we have seen rapid rate rises as central banks attempt to curb inflation. Although markets like New Zealand, Canada, the US, and the UK have been somewhat insulated from the immediate impacts of rate rises given the much higher proportion of mortgages on fixed rates in these markets, already we are seeing indications of what is to come.
A few weeks ago the Reserve Bank of Australia (RBA) lifted interest rates for a ninth consecutive month – to a decade high of 3.35%. The decision was immediately met with a backlash in the press and from some corners of politics. The reaction is, perhaps, unsurprising given that property ownership is still very much considered the great Australian dream and the fact that 1 in 2 Australians currently servicing a mortgage. Much has also been made of the impending ‘fixed-rate cliff’ approaching in mid-2023 when a high number of fixed rate borrowers will roll off historically low rates.
How are mortgage holders reacting to rapid cash rate increases?
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