As the Reserve Bank raises interest rates for the fourth time in four months, home loan borrowers are bracing for more repayment pain.
The official interest rate is now at its highest level in six years, at 1.85 per cent, up from a record low of 0.1 per cent at the start of May.
Some economists say the RBA is only halfway through its rate-hiking cycle, with the goal of reaching, or even exceeding, 3 per cent by the end of the year.
As the cost of money goes up, the big four banks have dramatically raised interest rates for existing customers with variable-rate loans, and more rate rises are expected.
RateCity said bank customers could expect to see an average variable rate of 4.61 per cent if today's RBA rate rise was passed on in full.
It said the accumulated 1.75 per cent rise in borrowing costs that had occurred since early May would add an extra $472 a month to mortgage repayments for the typical borrower with a 25-year, $500,000 loan.
Borrowers with a $1 million mortgage would have to pay an extra $944 a month.
Fixed rates are rising
The rates offered for new fixed-rate loans are rising noticeably.
It comes as new Australian Bureau of Statistics (ABS) data show the proportion of new home loans being written with fixed rates has plunged to 9 per cent, down from the July 2021 peak of 46 per cent.
Sally Tindall, the research director at RateCity.com.au, said 90 lenders raised rates on fixed-term home loans last month before this latest increase.
Refinancing surges, demand for new loans weakens
As the higher cost of borrowing sees demand weakening for new home loans, more existing borrowers are refinancing to try to eke out lower interest rates from their banks' competitors.
Mortgage broker Mortgage Choice said 42 per cent of borrowers who took out home loans in June were refinancing existing debt.
Discounts offered by banks for new borrowers saw refinancing jump 9.7 per cent in June to a record $12.7 billion.
Meanwhile, the value of new loan commitments being written each month remains near historically high levels, but it is clearly on the decline.
The ABS said the value of mortgage approvals fell by 4.4 per cent in June, on a seasonally adjusted basis, as the RBA's rate hikes dampened appetite for borrowing.
Source: ABC News