Financial markets have priced in a one-in-three chance that the Reserve Bank of Australia (RBA) will increase the cash rate again in November. This would increase the average mortgage interest rate to about 6.75%.
Even if the RBA doesn’t hike in November, financial markets have fully priced in another hike later. Almost half of economists surveyed by the AFR also expect at least one additional cash rate increase.
Analysis by REA Group shows that repayments on a median-priced home will account for 37.4% of a typical household’s income if there is another rate rise. This is just shy of the record high of 37.5% in December 1989.
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