Australia hiked its key interest rate on Tuesday for the fifth time during the current economic up-cycle.
Australia has had more robust economic data than the U.S, plus suffered far less during the downturn, so has been able to tighten monetary policy substantially already.
We’re still of course waiting for the U.S. to follow suit on the interest rate front.
Yet despite Australia’s relative economic strength, homeowners their are starting to feel the bite of higher interest rates since mortgage costs have surged as a result of monetary tightening.
According to the Sydney Morning Herald, many homeowners are paying $3,250 more per year (3,500 Aussie dollars) on their mortgages than just a year back. This is before considering the latest hike, or expected future ones. Australia’s interest rate up-cycle is already well under way, thus is well ahead of the U.S., but one has to wonder — when will the U.S. economy be strong enough that Americans with adjustable rate mortgages will be able to handle such huge added mortgage costs? Even with a rather benign economic outlook, it has to be many, many years away.
Business Insider Emails & Alerts
Site highlights each day to your inbox.