HOMEOWNERS in Newcastle and Lake Macquarie are set for more mortgage pain after the Reserve Bank Australia handed down a seventh consecutive cash rate hike on Tuesday.
As predicted, the RBA lifted the cash rate a further 25 basis points to 2.85 per cent, up from a record low 0.1 per cent at the start of May.
Figures compiled by comparison site Canstar show that in Newcastle and Lake Macquarie, where the median house price is $841,296, homeowners could pay an extra $106 each month on their mortgage as a result of the rate rise, with their monthly repayments increasing to $3,919.
The calculation is based on an 80 per cent loan over 30 years.
The Reserve Bank has warned that interest rates will continue to rise in the new year as it tries to tame the highest inflation in decades.
According to NAB's and Westpac's latest cash rate forecasts, borrowers can expect a 0.25 percentage point cash rate rise in February and March.
Australia's annual inflation rate of 7.3 per cent is at its highest level since June 1990, according to ABS data.
The Reserve Bank expects inflation to reach 8 per cent by the end of the year before it eases to 4.75 per cent over 2023.
The cash rate hike announcement comes as a new study shows more mortgage holders are at risk of mortgage stress.
An estimated 948,000 mortgage holders were "at risk" of mortgage stress in the three months to September 2022 according to new research by Roy Morgan.
After the two latest interest rate increases of 0.25 per cent, those 948,000 mortgage holders are now considered at risk, which account for 21.1 per cent of mortgage holders.
If the RBA lifts interest rates by 0.25 per cent again next month, 1,151,000 mortgage holders would then be classified as 'At Risk' - an increase of 203,000 on September 2022.
This would be the most mortgage holders classified as 'At Risk' since April 2012.
Newcastle-based real estate agent Graeme Brownlow from Walkom Real Estate said rising interest rates have created hesitancy in the property market.
"The biggest effect is that it's taking so long for banks to approve loans," Mr Brownlow said
"When people reapply for a loan, their borrowing capacity has been reduced so that is the difficulty of the market at the moment.
"Buyers are still out there but they're a bit more cautious because the banks have wound them back.
"Before you could go and the bank would approve you in a fortnight. Now they're taking up to six weeks and this has created hesitancy in the market."
