RBA rates hold destroying Australian livelihoods: 'Threat to repossess our home'

The Reserve Bank of Australia's (RBA) decision to hold interest rates at a 12-year high of 4.35 per cent could spark a large jump in the unemployment rate. The official cash rate has been held here since November last year off the back of 13 rate rises that started in the middle of 2022.

Many Aussie homeowners have been struggling to keep up with their repayments in that time and while a hold won't produce any additional pain, it's becoming too much for some. Father-of-three Martin* told Yahoo Finance he's about to lose his home and is worried about the impact this will have on his family.

"There is no help, for anyone, and I really need financial assistance. My lender has also now issued a threat to repossess my home," he said.

"We are about to see a financial councillor to try to plead our case but it looks like we will be out. After countless requests to avoid collating the interest, fees and penalties, they still did this."

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"We were as good as promised by the RBA that there would be no raising in interest rates till 2024... This demographic saw a chance and were told by the most important banking official in Australia that they were safe."

Recently released Canstar research found couples earning the average combined income of $184,060 and who maxed out their borrowing capacity to buy right before the rate hikes started two years ago are now spending about 44 per cent of their before-tax income on their mortgage repayments.

That leaves very little leftover to cover insurance costs, household bills, petrol and groceries - all of which have been going up in price in the last 12 months.

“Borrowers who maxed out their borrowing to the highest affordable level just before the Reserve Bank started lifting the cash rate will now be in a seriously stressed position,” Canstar finance expert Steve Mickenbecker said.

Do you have a story? Email stew.perrie@yahooinc.com

Why an RBA rate hold could be bad news for many

Finder data published today revealed 77 per cent of experts fear there will be a "significant increase" in the unemployment rate over the coming six months.

Economist and Yahoo Finance contributor Stephen Koukoulas said the RBA's decision to hold will no doubt "condemn tens of thousands of people" to be jobless soon.

"Next RBA meeting after today, is September 24," he said.

"Seven weeks mightn't sound a lot but when the wheels are falling off the economy, businesses are faltering, markets are spewing, unemployment is rising, it is an eternity.

"The RBA needs to throw out its old, stale playbook and cut."

The number of Aussie homeowners who said they were finding it difficult to pay their mortgage in July has exploded to 41 per cent, up from 34 per cent in June.

RBA economists Ryan Morgan and Elena Ryan also found the number of mortgage holders with loan-to-value ratios above 80 per cent who are more than 90 days behind on their repayments has grown from 1 per cent to nearly 3 per cent.

Finder's head of consumer research, Graham Cooke, had some advice for the many homeowners who are worried about the next few months.

“First, review your home loan to make sure you’re not paying more than you need to – pay attention to what your lender is offering new customers," he said.

“Next, look at your monthly spending and budget. Are there any obvious expenses you can cut out?

“Finally, see if you can pay less for what you’re already using – from your mobile phone plan to car insurance to where you shop for groceries – some simple swaps could save you thousands of dollars over the course of a year."

He urged anyone who is "really struggling" to communicate this with your lender as soon as possible as they can offer hardship programs to provide some short-term relief.

If you're feeling overwhelmed and need help dealing with financial stress, you can contact free advice and counselling from the National Debt Helpline. You can call 1800 007 007 between 9.30am and 4.30pm Monday to Friday, or reach out to Mob Strong Debt Help on 1800 808 488.

*name changed to protect identity.

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