WHEN Gavin McCulloch and his wife purchased their Maryland home five years ago, Australia's cash rate sat at 1.50 per cent.
"Because of that we were able to lock in a really good rate," Mr McCulloch said.
But in May, when the RBA announced its first cash rate hike in 11 years, his fixed rate was coming to an end.
He refinanced with a new lender and secured a mortgage 0.7 per cent higher than his previous rate.
Since the first rate hike, Mr McCulloch's mortgage repayments have increased by $470 a month.
"Fortunately, we were able to get on the front foot by refinancing and be in a better position," he said.
"I have split it this time around so the bulk of our loan is fixed and I have a smaller amount variable."
While Mr McCulloch feels confident about riding out further rate rises, a new report from CoreLogic and Aussie Home Loans details how high monthly mortgage repayments could shift for fixed-rate borrowers at the end of their term if the RBA lifts the cash rate a further 40 basis points to 3.5 per cent.
The Your Next Mortgage Move report reveals that homeowners in Newcastle and Lake Macquarie who borrowed on bottomed-out fixed rates in May 2021 could see their mortgage repayments increase by $1,192 a month when it comes time to refinance in 2023.
That figure is based on a median dwelling value of $696,335 in the region (May 2021) on a home loan principal of $557,068.
On these figures, the monthly home loan repayment at 1.95 per cent in May 2021 was $2,045.
In October 2022, repayments on the same loan would have increased to $3,737 based on an average new variable rate of 5.71 per cent.
CoreLogic's head of research Eliza Owen said that with the cash rate hitting its highest level in a decade on Tuesday, the number of mortgage holders increasingly pressed with servicing their mortgage is likely to trend higher.
"We're already seeing the nation turning to refinancing to achieve more flexibility or competitive pricing in home loans, with a record $19 billion in external refinancing secured through August," she said.
"Throughout 2023 this may result in more conversion of owner-occupied property to investment property, people taking on additional work, and potentially new highs in refinancing.
"However, with the bulk of fixed-term loans expiring over the year ahead, this will become more critical in order to ease the economic burden facing homeowners."
Fixed-rate loans have fallen in popularity, with only 4 per cent of new borrowers opting to fix, compared to 46 per cent in July 2021.
