With the most recent interest rate hike many Australians can’t borrow as much as they could previously.
This in turn has stopped many entering the property market.
An Aussie on an average salary can borrow almost $140,000 less than they could in April after eight interest rate hikes, making it much harder to break into the property market.
The RBA’s latest 0.25 per cent hike on Tuesday took the cash rate to a 10-year high of 3.1 per cent, up from a record low of 0.1 per cent.
The successive hikes added $91 to monthly repayments on the average $600,000 mortgage, with typical borrowers set to pay $934 more than they did in April.
As Australians feel the pinch, banks have seen a significant rollback in how much they can lend prospective buyers.
A worker earning the average full-time salary of $92,030 can now borrow $138,900 less than they could before the hikes began – more than a 20 per cent drop.
For a couple earning $138,045, with one spouse on the average full-time wage and the other working part-time for $46,015, their borrowing capacity has fallen by 22 per cent.
This couple in April could borrow $878,400, but the eighth rate rise has seen that drop by $193,700 to $684,700.
With a 20 per cent deposit, this couple – who could have bought a $1.09 million house in April — can now only borrow for an $855,875 home.
Although we are seeing the rental market in full swing we still are seeing more and more people being taken off the property market.