Mark Bouris Discusses Interest Rate Rise Impacts

Peter Stefanovic said, “the honeymoon period is well and truly over” as the RBA increased the official cash rate by 0.25% on Tuesday.

Many Australian lenders, including the big four major banks, passed the rate increase on in full to customers. Mark outlined what this means for borrowers: “Let me just give you a quick example: for every half a per cent increase in the interest rate…lenders will lend a borrower around 5% less. So if last week, I would have lent you $500,000 and this week there was a 0.5% increase in the interest rate, then this week, I’m only going to lend you $480,000.”

This has obvious practical implications for everyday Australians. 

“That means if your deposit is a fixed amount, and you go to an auction you would have $20,000 less to spend in buying that property unless somehow you can increase your deposit,” said Bouris.

“So borrowers basically will be able to borrow less, because when we make the assessment, that calculation of how much we lend you, we assess on the current rates.”

Watch the full video above to hear Mark’s thoughts on how the property prices may be impacted and his analysis of the RBA’s decisions.