Rate hikes shrink Perth home buyers’ budgets by almost $200,000
The average family’s home buying budget will have shrunk by an estimated $195,500 as a result of the last six months of Reserve Bank of Australia rate rises, once the latest hike takes effect.
As interest rates rise, people applying for a loan are seeing the maximum amount they can borrow from the bank fall because they are paying more in interest.
Banks stress-test potential borrowers to see if they can afford their mortgage repayments on an interest rate that’s 3 percentage points above their current rate. As interest rates get higher, this test gets harder to pass.
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