RBA says borrowers can handle interest rate hikes, but experts warn mortgage payments will rise

The Reserve Bank’s deputy governor is confident most mortgage borrowers can cope with rapidly rising interest rates, even as analysts suggest many households could soon face extra payments of $1,000 a month or more.

RBA Deputy Governor Michele Bullock said Australian households were generally in a good position to weather upcoming interest rate increases.

He said rate hikes are unlikely to increase financial stability risks stemming from the household sector.

However, despite his optimistic views on raising rates, he said extremely low interest rates during the pandemic had encouraged many people to take out fixed-rate home loans, and the proportion of home credit in Fixed-rate mortgages jumped from 20 to nearly 40 percent. penny.

And most of those fixed rates would expire next year, leaving millions of households moving to much higher variable rates, he acknowledged.

What will happen when the fixed rates are renewed?

Speaking in Brisbane, Ms Bullock said the RBA board would be watching closely how households responded to rate increases this year.

She said that households with fixed-rate mortgages had been protected from interest rate increases until now.

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