Reserve Bank of Australia Governor Michele Bullock is widely tipped to announce another interest rate hike this year. Picture: Martin Ollman
A second interest-rate hike in 2026 expected is set to heap more cost-of-living pressure on Geelong homebuyers.
New modelling shows the before-tax annual income hurdle homebuyers need to climb to secure a mortgage on a median-priced home across Geelong will rise if the Reserve Bank follows through with a second interest-rate rise this year.
That’s looking increasingly likely, particularly as the Middle East conflict has caused a spike in fuel prices.
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The Canstar data reveals the annual average income required across Geelong would be about $2500 higher to maintain borrowing power following a second rate hike, but the modelling shows higher loan repayments would push borrowers into mortgage stress in more suburbs, including Drysdale, Herne Hill, Indented Head and Lovely Banks.
A couple purchasing a typical $700,000 Geelong home would need to earn a combined annual income of about $136,000.
The three-bedroom house at 11 Seal St, Armstrong Creek, is listed for sale with price hopes from $640,000 to $680,000.
Canstar data insights director Sally Tindall.
Canstar data insights director Sally Tindall said for the average income earner on a full-time wage, a standard .25 percentage point hike to the cash rate translates into a $12,000 drop in the maximum amount they can borrow from the bank.
“To add insult to injury, despite the February hike and the threat of further rises, property prices are expected to keep on climbing due to a lack of stock, increasing the squeeze on first-home buyers,” Ms Tindall said.
The modelling for buying a home with a 5 per cent deposit shows a second interest-rate hike would push buyers into mortgage stress across 13 more suburbs across Geelong, including first-home buyer hot spots such as Armstrong Creek, Charlemont, Curlewis and Mount Duneed.
The three-bedroom unit at 1/23 Bruce Street, Bell Park, is listed for sale with price hopes from $600,000 to $660,000.
Maxwell Collins real estate agent Lois Wilson.
Maxwell Collins Geelong agent Lois Wilson said more first-time buyers recognised they needed to reduce their budgets to allow for interest-rate rises.
“Some that were looking last year have had to go back and get their pre-approval adjusted, and they’re finding it is being adjusted downward.”
Many were widening their search after feeling they were being priced out of traditional hotspots, she said.
“While Belmont and Hamlyn Heights, for example, have traditionally been of interest to first-home buyers, they’re looking outside those towards Bell Park and Bell Post Hill and to Newcomb, which have become very popular,” Ms Wilson said.
The two-bedroom house at 16 Pride Avenue, Hamlyn Heights, is listed for sale with price hopes from $625,000 to $655,000.
The three-bedroom house at 122 McCurdy Road, Herne Hill, is listed for sale with price hopes from $695,000 to $760,000.
The $600,000 to $700,000 price bracket was most popular, and prices for similar properties had risen around 10 per cent in 12 months, Ms Wilson said.
“If we’ve got anything in Herne Hill, Hamlyn Heights or Belmont, we’re absolutely swamped with interest from first-home buyers as they see them as really good family areas.”
The conflict in the Middle East will further complicate matters, with rising petrol prices heaping pressure on inflation.
Ms Tindall said tough questions need to be asked of bosses and bank managers to get through the difficult period.
“It’s never a fun conversation to initiate, but working up the gumption to ask your boss for a pay rise can really help boost your borrowing capacity,” she said.
Annual income needed to afford a house by suburb after a second interest-rate hike
Suburb |
Median price |
Before-Tax income required to borrow 80% of property value |
|
Single |
Couple |
||
| Anglesea | $1.33m | $195,000 | $214,000 |
| Apollo Bay | $820,000 | $126,000 | $152,000 |
| Armstrong Creek | $670,000 | $108,000 | $134,000 |
| Bannockburn | $806,000 | $124,000 | $150,000 |
| Barwon Heads | $1.44m | $212,000 | $228,000 |
| Bell Park | $680,000 | $109,000 | $134,000 |
| Bell Post Hill | $691,500 | $110,000 | $136,000 |
| Belmont | $708,000 | $112,000 | $138,000 |
| Breakwater | $557,500 | $94,000 | $120,000 |
| Charlemont | $640,000 | $104,000 | $130,000 |
| Clifton Springs | $680,000 | $109,000 | $134,000 |
| Corio | $540,000 | $92,000 | $118,000 |
| Curlewis | $687,500 | $110,000 | $136,000 |
| Drysdale | $760,000 | $119,000 | $144,000 |
| East Geelong | $862,000 | $131,000 | $156,000 |
| Fyansford | $980,000 | $147,000 | $172,000 |
| Geelong | $920,250 | $139,000 | $164,000 |
| Geelong West | $857,500 | $131,000 | $156,000 |
| Grovedale | $700,000 | $111,000 | $136,000 |
| Hamlyn Heights | $737,000 | $116,000 | $142,000 |
| Herne Hill | $755,000 | $118,000 | $144,000 |
| Highton | $898,000 | $136,000 | $162,000 |
| Indented Head | $760,000 | $119,000 | $144,000 |
| Jan Juc | $1.32m | $193,000 | $212,000 |
| Lara | $700,000 | $111,000 | $136,000 |
| Leopold | $690,200 | $110,000 | $136,000 |
| Lorne | $1.92m | $287,000 | $288,000 |
| Lovely Banks | $730,000 | $115,000 | $140,000 |
| Manifold Heights | $960,000 | $144,000 | $168,000 |
| Marshall | $650,000 | $105,000 | $130,000 |
| Mount Duneed | $705,000 | $112,000 | $138,000 |
| Newcomb | $605,750 | $100,000 | $126,000 |
| Newtown | $1.08m | $161,000 | $184,000 |
| Norlane | $493,944 | $86,000 | $112,000 |
| North Geelong | $645,000 | $105,000 | $130,000 |
| Ocean Grove | $950,000 | $143,000 | $168,000 |
| Point Lonsdale | $1.2m | $177,000 | $198,000 |
| Portarlington | $850,000 | $130,000 | $156,000 |
| St Albans Park | $667,750 | $108,000 | $132,000 |
| St Leonards | $722,500 | $114,000 | $140,000 |
| Teesdale | $965,000 | $145,000 | $170,000 |
| Thomson | $576,000 | $96,000 | $122,000 |
| Torquay | $1.2m | $177,000 | $198,000 |
| Wandana Heights | $1.12m | $166,000 | $188,000 |
| Waurn Ponds | $790,000 | $122,000 | $148,000 |
| Whittington | $580,000 | $97,000 | $122,000 |
| Winchelsea | $640,000 | $104,000 | $130,000 |
Source: Canstar
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