Higher interest rates and mortgage repayments will be ‘the new normal’ for home owners in 2022, analyst says

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The Reserve Bank’s 25-basis point increase is just the first of many on the horizon, and Queensland home owners need to brace for higher home loan repayments over the next 18 months, a leading property analyst has said.

The central bank’s rate rise was its first in more than 11 years, taking the official cash rate target to 0.35 per cent.

CoreLogic research director Tim Lawless said while a single increase would be manageable for most people across Queensland, further rises would put pressure on household finances.

“The median value of a house in Brisbane is about $771,000, so the typical loan size if someone’s got a 20 per cent deposit, would be nearly $617,000.

“This latest 25 basis-point rate hike means the typical mortgage for a new borrower would be about $81 higher per month.

“But of course, as we see rates rise more – say for example if we see interest rates go up by 100 basis points — then that’s adding $332 per month to the typical mortgage which is becoming more material.”

Mr Lawless said higher mortgage repayments would become “the new normal” for borrowers in 2022.

“It won’t be too long before we see the cash rate normalising, getting back to average levels, or maybe even getting beyond that.”

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