The Reserve Bank will meet today and is expected to lift the cash rate by as much as half a per cent to address inflation.
Rate rises are forecast to continue for months, prompting fears that many mortgage-holders will be unable to make ends meet by Christmas.
If the cash rate is lifted by 0.4 per cent, which most economists are predicting, it will add $125 a month to the average $600,000 mortgage – rounding out to an extra $1500 a year.
And if rates continue to rise, peaking at 2.5 per cent as predicted, that would mean an extra $716 a month on the same mortgage, or about $8500 more a year.
Industry observers say if that happens, half of all households with a mortgage will face financial shortfalls by Christmas.
The forecast is prompting further price falls in the housing market. Auction clearance rates dipped below 60 per cent in Sydney and Melbourne, while Brisbane and Canberra recorded their lowest clearance rates of the year.
It’s not just homeowners feeling the pinch, as Australia’s rental crisis also continues to worsen.
Rental property numbers have halved nation-wide in just two years.
According to figures from Domain, vacancy rates in Adelaide are at just 0.3 per cent, while Brisbane is at 0.6 per cent.
Industry leaders say it’s forcing tenants to live in dire situations, or cop huge rent increases due to lack of supply.
And it’s feared that increased pressure on mortgages will see landlords increase rents further.