Western Australia is significantly the most mortgaged state in Australia, but the latest rate rise does not mean it is all doom and gloom.
Yesterday's decision by the Reserve Bank of Australia to increase the cash rate by 0.5% means that payments for the average West Australian household with a mortgage of $450,000 will increase by approximately $135 each month. Australia's central bank has now raised interest rates for five months in a row in its most aggressive rate rises since 1994, when it lifted the cash rate from 4.75 per cent to 7.5 per cent in just five months.
But Bankwest Curtin Economics Centre research fellow Silvia Salazar said WA was generally in a better position than the rest of the country: "WA has had some price increases in terms of dwellings in the last two years … but they have not been as high as they have been in the eastern states," she said. "So even though there are more people who took out mortgages during that period, at a higher value than never before, they are still better off."
Many economists have also noted that the RBA’s rate increases will likely be so high, and so swift, that it may have to start cutting rates again by the end of next year once growth starts to falter and unemployment starts rising.
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