CEO of Joust, Carl Hammerschmidt speaks to Channel 7 about the suburbs that will be hit the hardest by the Reserve Banks latest cash announcement and advice for new first home buyers looking to get into the market.
"If you take into account the last three rate rises, there's over 2 million households suffering mortgage stress. That's on a cash-in, cash-out basis."
Andrew: Already-struggling mortgage holders have been dealt another blow from the Reserve Bank, lifting the cash rate by half a percent earlier today. New data from Joust has revealed which suburbs will be hit the hardest. Let's go straight to Joust chief executive, Carl Hammerschmidt, now, and Carl, lots of borrowers out there might be a bit nervous. Which areas in Melbourne and Victoria are going to feel this the most?
Carl Hammerschmidt: Oh. Hi, Andrew. How are you? Yes. We work with a company called Digital Finance Analytics. They've got a rolling omnibus survey of around 50,000 households around Australia, and they've found that nationally, there's, if you take into account the last three rate rises, there's over 2 million households suffering mortgage stress. That's on a cash-in, cash-out basis. So they're either already struggling to pay the mortgage, or that they're doing it under duress.
Carl Hammerschmidt: In Victoria, that amounts to over 600,000 households now, and we found that it's the suburbs around the southeast and also the northwest of Melbourne that are really feeling it, places like Moorabbin, where there's 45% of households under mortgage stress currently, Bend of Islands, Strathmore Heights, Williamstown, but also suburbs that are, you would think, that are reasonably quite affluent, as well, like Toorak and Kew, which have got 50% and 21% mortgage stress, as well.
Andrew: So we are expecting these rate hikes to continue. What's your advice to mortgage holders at the moment?
Carl Hammerschmidt: Well, look. We think that the rate ... going to go to anywhere between one and a half and 2% net this year, and then, in 2023, anywhere between, or anywhere up to 2.5%. So the advice would be to shop around. Make sure that you're getting the best deal. If you're coming off a fixed rate, or you've been waiting to see what happens, and you're on a variable rate, look at all the lenders. Make sure that you're getting the best deal possible, and there'll be a lot of competition for all the new mortgages that are coming on the market over the next six to 12 months.
Andrew: Just finally, Carl, what about those looking to enter the market for the first time? Have you got any advice for them? Should they be worried about this and perhaps look to enter it sooner or hold off and wait for it to stabilize?
Carl Hammerschmidt: Well, lenders take into account these rate movements when they assess people for mortgages, so they'll be assessing them with the rises to come in mind, and so look at ... As I said, there'll be a lot of competition for people coming, their mortgages coming out of the market between the lenders now. And so if you shop around, if you're smart, you can still find very good variable rates, and the advice is to always make sure that you're comparing what's out there and that you're looking for the best deal.
Andrew: Thanks for that. Carl Hammerschmidt from Joust, the CEO of Joust there.