Small mortgage increase will hurt as outer suburbs struggle post-COVID

November 15, 2021
WA Today.

Thousands of households who used record-low interest rates to buy into the property market would struggle to survive a small increase in their mortgage repayments, new research shows with warnings people in Australia’s outer suburbs are struggling after COVID-19 lockdowns.

More than half of people say they would consider refinancing their mortgage if repayments increased $300 a month, the lift in repayments that would flow from a 1 percentage point rise on a loan of $572,000.

More than half of people surveyed by finance brokers suggest they would struggle from a $300 a month increase in their mortgage repayments.


The survey, carried out by research firm McCrindle on behalf of the Finance Brokers Association of Australia, suggests any move to lift interest rates to quell inflation will have to be small given the high level of debt carried by home buyers.

All major banks have started increasing their fixed lending rates as global borrowing costs rise on growing fears of a lift in inflation.


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Earlier this year, each of the major banks had two-year fixed mortgage rates below 2 per cent while five-year loans could be locked in for under 2.25 per cent. Fixed rates have now increased by up to 0.75 percentage points.

Financial markets are betting the Reserve Bank, which has said it does not expect to lift interest rates until 2024, will have to move by the middle of next year.

The RBA and regulators are aware of the risk posed by rising interest rates. The Australian Prudential Regulation Authority now requires lenders to test the ability of borrowers to handle a 3 percentage point increase in repayments.

The survey found 57 per cent of more than 1000 people said they could not afford “at all” a $300 a month increase.



Among those with a gross weekly income of between $2000 and $3000, 46 per cent surveyed said they would struggle to meet such an increase.

Single parent families (80 per cent), those with a weekly income of between $700 and $1200 (76 per cent) and those in remote areas (71 per cent) said they could not meet a $300 monthly increase.

Finance Brokers Association of Australia managing director Peter White said Australians could have grown complacent as it had been 11 years since there had been an increase in official interest rates.

RBA governor Philip Lowe has repeatedly argued the bank does not expect the official cash rate to start increasing until 2024.


“Many Australians are clearly on the brink and are sleepwalking into disaster, living in the false hope that rates will stay this low,” he said.

“This survey is a wake-up call and shows that even a small rise in rates - which is looking more likely next year with rising inflation - could be catastrophic for our nation.”   

Separate research by the National Growth Areas Alliance, which represents capital city outer suburban areas such as Liverpool in Sydney, Whittlesea in Melbourne and Logan in Brisbane, shows soaring house prices are a growing problem.

In the June quarter last year, 28 per cent of homeowners in outer suburban areas were worried about the impact of the pandemic on house prices. That’s climbed to 40 per cent. Among renters, it has climbed to 58 per cent from 31.

One in five people is struggling financially, with the highest proportion in NSW and Victoria (both at 26 per cent), lower income earners (28 per cent) and women (25 per cent).   

Alliance chief executive Bronwen Clark said the federal government needed to create a minister for growth areas, so planning ensured a better distribution of infrastructure, jobs and housing in the capital cities.

She said the outer suburbs had borne the brunt of COVID-19 restrictions, especially in employment, which had fed into their financial issues.

“Our outer suburbs are home to the most essential workers and faced the strictest lockdowns,” she said.

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“These are the communities that saw us through the pandemic and to date governments have failed to understand their needs. Now, governments must join the dots between high COVID rates, high outbreak risk factors and the lag is social infrastructure in fast growing outer suburbs.”

Data due from the Australian Bureau of Statistics this week is expected to confirm wage growth lagging inflation which is at 3 per cent due in part to soaring petrol prices and a lift in the cost of building homes.   

House prices a nightmare – no longer the Australian dream for low paid workers

SDA Union.
10 November 2021

Low and middle-income earners risk permanent exclusion from the housing market as a result of the warp speed increases in home prices induced by the COVID-19 pandemic.   

SDA National Secretary Gerard Dwyer reminded the House of Representatives housing inquiry on Wednesday that wage increases had not kept pace with housing price rises and the housing market was marching away from lower paid workers.   

The predicament of the tens of thousands of retail workers in regional Australia is even worse with regional property prices leaping by 24.8 percent in NSW, 20.3 percent in Victoria and 20.16 percent in Queensland.

Fully 64 percent of regional renters surveyed for the SDA/Essential Media State of the Regions report cited high rental and housing prices as a main concern for the future health and liveability of their local area.

More first homeowner schemes and raids on superannuation accounts are not the answer – the former raises the floor on house prices, the latter severely erodes the ability of lower paid workers to fund their retirement.

A new National Affordable Housing Agency is required to ensure secure and affordable housing, ownership and rental, for all Australians.

Build to rent and build to rent to buy must become central to national housing policy if current trends to unaffordability and insecurity are to be reversed.

Quotes from Gerard Dwyer, National Secretary the SDA the union for retail, fast food, warehouse and online retail workers:

“Housing is a nation building project and every Australian has a vested interest in ensuring it is provided on secure and affordable terms, be that as an owner or a renter, to underpin the nation’s social, economic, physical and mental health.

“Australia was one of the great home owning societies, but home ownership has been falling for the past 30 years and this will continue unless policy solutions are found.

“With the median house price in Sydney now 15 times average fulltime wages, compared with five times in 1981, housing affordability for workers on low wages is a constant struggle, a fact made more stark given the wage for a fulltime retail worker is $44 thousand, less than half the average fulltime wage.   

“This is now a regional problem, too. The significant proportion of SDA members who reside in regional Australia are now having to deal with the pressure of a housing market that is marching away from lower paid workers.”

Grappler Truth Teller Feller wrote on Nov 16^th, 2021 at 9:29am:


I remember some time ago in the UK, Houses were at a very low interest rate for home buyers, I believe no taxes as well (not available if you had one already)
Investment buyers had a higher interest rate and taxes were added as it was an investment property.
As it should be, an investment should attract taxes.

In Australia, the grubberment had their fingers in the pie, most politicians and senior public servants invest heavily in housing.
This drives the property market higher than it should be as they all got all the cheap deals and never paid much.

Investment properties should have taxes and should not be given low interest rates.

But the grubberment says that this would stop people investing and there would be a housing shortage.....well duh, we have one now.
An artificial housing shortage as they know if more housing was made available, their investments would begin to lose value.

Its all greed driven.
And allowing overseas purchases (at high prices) the cost is driven even further upward.
In China and many other countries, foreign ownership is illegal, you can rent, but never own.

We are all being sold off to multinational interests, all because of greed.

whiteknight wrote on Nov 16^th, 2021 at 5:58am:



I am a bity surprised that there would so many stupid people.
Or is this the usual proportion in WA?? Judging from our posters from Perth, probably.

Frank wrote on Nov 16^th, 2021 at 11:56am:

You highlighted the wrong bit.

Had you highlighted these words: people surveyed by finance brokers then the nature of the survey would have been clear.