House prices across Australia are expected to start falling with the two biggest banks hiking their mortgage rates multiple times in just weeks - with the others to follow.
Sydney's median house price has surged by 30.4 per cent during the past year to a very unaffordable $1.334million.
The national increase of 21.6 per cent in October, for both houses and apartments, was the fastest annual pace since early 1989, CoreLogic data showed.
Westpac, Australia's second biggest bank, is now expecting property prices to surge in 2021 before slowing next year and falling in 2023.
This is set to occur as the big banks keep hiking their mortgage rates while inflationary pressures increasingly worry the Reserve Bank of Australia.
House prices across Australia are expected to start falling with the two biggest banks hiking their mortgage rates multiple times in just weeks (pictured is an auction at Hurlstone Park in Sydney's inner west in May before the lockdowns)
The typical national property price of $686,339 is now so expensive an average, full-time worker on $90,329 a year would owe six times their salary, even with a 20 per cent mortgage deposit factored in.
That means a typical professional would already struggle to pay off a $550,000 loan without being in mortgage stress where they can't pay their bills.
The Australian Prudential Regulation Authority considers a debt-to-income ratio of six or more to be risky.
The Commonwealth Bank, Australia's biggest home lender, on Friday joined Westpac in raising its fixed mortgage rates, inflicting more pain on heavily indebted borrowers for the second time in just three weeks.
RateCity estimated the latest 0.5 percentage point increase to four-year fixed rates, taking them to 2.89 per cent, would add $131 to monthly mortgage repayments for a $500,000 loan, compared with the old fixed rate.
The 0.4 percentage point increase to three-year fixed rates, to 2.69 per cent, would add $104 a month to mortgage servicing costs.
A Commonwealth Bank borrower who didn't fix their rate before the increase would be paying an extra $5,503 in repayments over the fixed-rate term unless they were prepared to pay a $375 break lock fee.
Borrowers are put on to a standard variable loan unless they sign up to a new fixed rate.
RateCity research director Sally Tindall said ANZ and National Australia Bank were expected to also raise their fixed rates 'in a matter of days' after the Reserve Bank this week declared it was more concerned about inflation.
The Commonwealth Bank, Australia's biggest home lender, on Friday joined Westpac in raising its fixed mortgage rates, inflicting more pain on heavily indebted
