The first interest rate rise was in May this year when the cash rate rose from its lowest ever at 0.1 per cent a month earlier to its current 10-year high of 3.10 per cent.
“I bought at the end of July just when interest rates started going up,” Baker told 9News.
“It was a no-brainer, fixed rates were really high at the time so I stayed with variable rates to ride the interest rates every time they go up.”
But now interest rates have risen faster than Baker could have expected, leaving her concerned about her financial status considering they could continue surgine next year.
“I started at a really low interest rate and now my repayments have gone up by an extra couple of hundred dollars,” she said.
“It is a big squeeze. Especially when it’s not a couple of hundred, it’s close to half a grand each month.”
Baker’s variable rate started at 2.59 per cent and as of today, it’s hit 5.04 per cent.
These significant changes have forced Baker to reconsider where she’s spending her money and clamping down on her budget.
“I have to have different priorities about where my money is going. Not going out as much, budgeting on groceries, making sure I’m efficient on my fuel,” she said.
But the bad news gets worse for variable rate holders or those whose fixed rates are coming to an end, Lowe has forewarned of more rate pain in 2023.
”The Board expects to increase interest rates further over the period ahead, but it is not on a pre-set course. It is closely monitoring the global economy, household spending and wage and price-setting behaviour,” his monetary statement read.
“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”
The whole reason interest rates are rising so quickly is that the central bank is fighting a losing battle against inflation which currently sits at 6.9 per cent.
With Christmas just around the corner, economists are concerned a present splurge could lead to more interest rate hikes.
“They would be a little bit concerned if we splurged too heavily over Christmas and that led to some to some bill shock in early 2023 because we know there’s some other big bills that will be landing around mortgage repayments and energy repayments,” Westpac Senior Economist Matthew Hassan said.
“If they (consumer spending) do stay very strong that will be a big concern for the RBA and will keep them hiking for longer than we currently expect,” ANZ Senior Economist Felicity Emmett said.
Hassan warned Aussies to not get too carried away with spending this Christmas as it may bite mortgage holders even more in the new year.
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