More mortgage pain on the way in 2023, economist Cameron Bagrie says

  • 13/12/2022

A prominent economist says there are nervous times ahead for homeowners next year, with some facing a tough fight to afford mortgage repayments.

Cameron Bagrie's comments come as the Reserve Bank is predicted to deliver another couple of equal record-high 75 basis point interest rate hikes early next year to try and tame skyrocketing inflation. 

Bagrie said fixed mortgage rates were up in excess of 6 percent and "a couple of hundred" basis points of interest rate tightening were still on the way. 

That meant it was still early days when it came to the negative impacts of higher interest rates, he said.

"There's an awful lot of mortgage pain still around the corner in 2023," Bagrie told AM.

He said the "magic number" of where the official cash rate could end over the next few years "seems to be up around 5".

Bagrie said that pointed to strong economic headwinds ahead.

Most homeowners had 2-3 year fixed mortgage rates, deferring economic pain for some, he said.

"Households, so far, have seen about 120 basis points of interest rate hikes in regard to hitting their cash finances. As I said before, there are another 200-250 basis points to go.

"We're about one-third of the way through that negative cashflow impact on households of higher mortgage costs."  

Watch the video for the full interview.