Think of Australia’s $2.2 trillion economy. Now flip a coin.
Millions of households are this morning trying to work out how they will afford their mortgage repayments after the Reserve Bank’s decision to again lift rates yesterday.
Following Tuesday’s hike, borrowers with a $500,000 home loan must find an extra $76 each month, and their monthly repayments have increased by $1100 in just over a year.
“There are already increasing signs that the economy is weakening,” she said, amid a gloomy backdrop that has the official cash rate sitting at 4.1 per cent, compared to just 0.1 per cent in April last year.
She said the series of hikes “runs the real risk of tipping the economy into a recession, which we assign a 50 per cent risk to in the next 12 months”.
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Retail sales have slowed, the unemployment rate is rising and building construction has hit turbulence.
The decision to lift rates yesterday appears to have been driven by the uptick in the April consumer inflation data which lifted to 6.8 per cent, from 6.3 per cent.
”The impact of rate hikes is very unequal,” she said.
“All of the burden from higher interest rates (is) being placed on indebted Australian households,” she said, which amounts to around one in three families.
Aussie suburb sees rent prices shoot up $32,500 in 12 months