For many home loan borrowers, 2023 is shaping up to be another year of twists and turns, but maybe with the difficulty level turned up another couple of notches.
So, is it time to panic? Australia has proven to have one of the most resilient economies and has one of the lower inflation rates relative to most developed countries. However, as with the previous year, 2023 is going to throw some curveballs, almost certainly catching some people unawares.
Headed for a hard landing
Before last year’s rate rises, we hadn’t seen tightening monetary policy in 13 years. This means a lot of the younger generation of borrowers haven’t seen an increase and possibly don’t fully understand the impact this can have on their cashflow.
This could be concerning, noting that the government allowed our youngest and most unestablished (and, therefore, presumably our most vulnerable) borrowers to purchase property to 95% LVR with no lenders mortgage insurance.
With the higher cost of energy, grocery bills and tightening monetary policy, interest rates are starting to bite – 40% of mortgage holders are experiencing “some form of financial difficulty”, according to NAB’s latest financial hardship report.
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