The $50,000 hip pocket hit making Melbourne home buyers rethink their next move
- melbournepropertyh
- Jul 4, 2022
- 1 min read
The average Melbourne home buyer can borrow $50,000 less than they could just two months ago, new data shows, as interest rate rises start to clip their spending power at auction.
With more rate rises expected, maximum loan amounts could be cut by more than $116,000 by next year, leaving many home buyers rethinking what they should borrow and buy as higher repayments loom.
A buyer on an average wage who would have had a borrowing capacity of $677,400 before interest rates rose, can now only borrow $626,500 after interest rates rose by 0.25 per cent in May and 0.5 per cent in June, RateCity modelling shows.
By May next year that amount could be reduced to just $561,200, if rates continue to rise in line with Westpac economists’ forecasts. The Reserve Bank is tipped to lift rates another 25 to 50 basis points on Tuesday.
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