THE SQUIZ
Interest rates are set to rise again today after the Reserve Bank board meets this morning. With inflation continuing to climb and a new prediction from Treasurer Jim Chalmers that it will peak at 7.75% by the end of the year, today’s increase won’t be the last, experts say. If official rates go up by the anticipated 0.5% to 1.85% today, “it’s possible there may soon be no lenders with variable rates under 3%,” said RateCity.com.au’s Sally Tindall. “This is a stark change from just 12 months ago when 113 lenders were offering variable rates under 3%.” And even though the hikes started 3 months ago and the current rate remains relatively low, it’s already having a big effect on the property market.

OH YEAH?
Yeah. Home prices in some cities are falling faster than they have in decades as fewer buyers are willing or able to enter the market given the rate rises. Looking at July, analysts CoreLogic’s latest report says the worst-affected market was Sydney where prices were down 2.2% – the city’s sharpest decline in more than 30 years. AMP Capital economist Dr Shane Oliver is one expert who says it’s worrying. “The previous occasions where it came on this rapidly and early on was during the mid-80s before a severe recession and during the GFC, but the RBA were able to turn it around quickly by cutting rates. But there’s not much relief on the horizon just yet, so there’s a high risk of further acceleration in price declines as the possibility of a rate cut is more than a year away.”

SO WHAT DOES THAT MEAN?
Many Aussies are seeing their cost of living increase significantly with rising interest rates. Since rates started climbing in May, someone with a $500,000 loan has had to find an extra $472, and there’s likely to be more where that came from because official rates are expected to more than double. But it’s not just mortgage-holders feeling the squeeze – renters also face hikes in many regions. You only have to go to the shops for food or fill up your tank to know that grocery and petrol costs are up. Gas prices are increasing due to supply issues. It’s enough to make you want to pack it in and head to the pub. Except, oh no…