spacer
spacer
spacer
spacer



CPA LOGO
spacer
Latest News
Hot Issues
Small businesses may ‘collapse under strain of payday super’, IPA warns
ATO’s hands tied with scrapping on-hold debts, expert says
What Drives Your Business Growth and Profits?
Australian Taxation Office (ATO) shifting to firmer debt collection activity
Why employee v contractor comes down to fine print
Sharing economy reporting regime for platform operators
Countries producing the most solar power by gigawatt hours
Illegal access nets $637 million
Accessing superannuation benefits.
Does your business have a company Power of Attorney?
Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
GrantConnect
2 in 3 SMEs benefit from instant asset write-off, survey reveals
Updated guidance on R&D claims
Do you know how to recover debts?
Wheat Production by Country
Types of small business benchmarks
What is a Commercial Lease?
ATO warns advisers against suspect R&D tax claims
The year of workplace law upheaval
How to Resolve Invoice Payment Disputes
Raft of revenue tweaks in MYEFO to raise millions
The Countries that Export the Most Wine in the World
Articles archive
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
How Have Australians Reacted to Interest Rate Hikes?

Interest rates have been on the rise in Australia, and this has caused a lot of concern among consumers. Many people are worried that they will not be able to afford their monthly mortgage payments, and some are even considering selling their homes.



 


In this blog post, we will take a closer look at how Australians have reacted to interest rate hikes and discuss the pros and cons of these increases.


Initial Reactions


So far, the reaction to interest rate hikes has been mixed. Some people feel like the banks are taking advantage of them, while others believe that the economy must recover.


There are pros and cons to higher interest rates, and it is difficult to say whether or not they are good for the economy. What is certain is that they are causing a lot of financial stress for many Australians. If you are struggling to keep up with your mortgage payments, it is important to speak to your bank or financial advisor about your options. 


There may be some relief available, and getting advice from a professional is important before making any decisions about your finances. 


Increasing Mortgage Stress


Undoubtedly, interest rate hikes have triggered an increasing level of mortgage stress for Australians. Mortgage payments are rising, and many people are struggling to keep up with their monthly bills. This has led to an increase in people defaulting on their loans, which has a ripple effect on the economy. 


In some cases, people are forced to sell their homes at a loss in order to pay off their debt. This is not only devastating for the individual families involved, but it also has a negative impact on the property market as a whole.


Increase in Loan Refinancing


Additionally, refinancing rates have shot up, as people scramble to switch their loans for better repayment terms and flexibility. According to the Sydney Morning Herald, more than a million homeowners have refinanced their home loans in the past year. 


For more information on how refinancing can help stave off the impacts of rising interest rates, check out this resource by Joust.


Decrease in Spending


Higher interest rates also mean that people will have less money left in their household budget to spend on other things. Not only does this cause strain on mortgage repayments, it also means there's less money available to funnel into the economy through regular commerce. 


Recent data shows that Australians have been spending less on entertainment, recreation and eating out since interest rates began rising earlier in the year. Clothing and essential items such as food and petrol have not seen a significant decrease in spending. However, this can put even more pressure on household budgets because inflation in essential items has been rising much faster than in non-essential items.


On the other hand, to bring inflation back under control, it is necessary to slow down consumer spending. This is so that the demand can become more on par with the available supply. If people continue to spend money at the same rate as they have been, prices will continue to increase, and we will experience more inflation. Higher interest rates act as a brake on spending, which can help to bring inflation under control


Higher interest rates also help to do this by making it more expensive to borrow money. This then encourages people to save, which in turn reduces the amount of money that is available to be spent. This can positively affect the economy as a whole, as it helps reduce the amount of debt in the system and promote sustainable economic growth.


According to CNBC, Australians were well placed to manage the effects of the interest rate rises due to a buffer of savings due to the pandemic and a tight labour market. A high percentage of Australians were already ahead on their mortgage repayments and so may find it easier to stay on top of their loan. This is likely to help the economy recover more quickly from the interest rate rises.


 


 


 


Lucy Mitchell
24 November 2022
accountantsdaily.com.au




24th-December-2022
spacer
Privacy Policy | Disclaimer