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HOW ARE RATE RISES IMPACTING AUSSIES' BORROWING PLANS?

A Money Study, April 2023

A father and daughter celebrating in the living room of their new house

About the study

Money surveyed 1,005 Australians to gauge whether the growing interest rates and decisions made by the Reserve Bank of Australia have impacted their borrowing plans this year.

The survey also asked Australian’s opinions on what the RBA will do about interest rates for the rest of the year, and whether they trust the RBA to get the balance right between interest rates, inflation, and the ability among Australians to make their loan repayments.

The pool of survey respondents matches the age and geographical spread of the Australian population. 

How has high inflation and growing interest rates impacted Aussie’s borrowing plans?

Money asked responders whether the high inflation and growing interest rates in the last year would have changed their plans to get a loan, if they were in the market for a new one.

The survey found that the majority of respondents (70%) would have been scared off from getting a new home, car, or personal loan. Specifically:

  • 45% said the higher cost of living and growing interest rates would have prevented them getting a home loan.
  • 25% said higher inflation and growing rates have would have prevented them getting a car loan or personal loan.
  • 30% said the rate rises wouldn’t have impacted their borrowing decisions.

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan?

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan?

By gender, female respondents reported being more put off by the interest rates rise if they were getting a home loan: almost half (49%) would have been put off, compared with 42% of male respondents.

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan? By gender

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan? By gender

There is also a notable difference of the impact of rate rises between the age groups. For 18-30-year-olds, 58% said they were put off getting a home loan due to growing interest rates, which compares with:

  • 50% of 31-50s
  • 34% of over-50s

Interestingly, however, younger Australians are less concerned about getting a car or personal loan on the higher rates, with only 21% reportedly being put off. This is compared to:

  • 27% of 31-50s
  • 25% of over-50s

Traditionally, personal and car loan interest rates are less sensitive to RBA rate changes than home loan rates. Instead, rates on car and personal loans are heavily influenced by the borrower's credit score.

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan? By age

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan? By age.

By state, there is a similarly held consensus for being put off getting a car or personal loan due to high inflation and growing interest rates. Respondents from Victoria are slightly ahead, with 27% agreeing to this statement. This is followed by:

  • 25% of respondents from NSW
  • 23% of respondents from South Australia
  • 23% of Western Australians
  • 22% of Queenslanders

South Australian respondents are notably less concerned about getting a home loan in the current market, with only 37% responding so, this compares with:

  • 49% of respondents from NSW
  • 48% of Western Australians
  • 46% of Queenslanders
  • 41% of respondents from Victoria

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan? By state

If you were in the market for a new loan, would the high inflation and growing interest rates in the last year have changed your plans to get a loan? By State.

What do Aussies predict the Reserve Bank will do this year, following the pause on rate rises in April?

Survey respondents were asked to select which response they agree with, based on the Reserve Bank’s decision to put interest rates on hold in April. The highest percentage of respondents (24%) believe April was an anomaly and rates will continue to rise over the next few months.

This is followed by:
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19% think there will be a few more months this year when the RBA will keep rates on hold, as it continues to monitor the market.

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18% think interest rates may stay on hold in May, while the RBA continues to monitor the market.

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17% think the RBA will raise rates by smaller percentage points in the next few months.

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15% think it’s a sign that rates have almost peaked and will start to come down before the end of the year.

What do you think about the Reserve Bank's decision to put interest rates on hold on 4 April?

What do you think about the Reserve Bank's decision to put interest rates on hold on 4 April?

When asked about what the RBA will do following the April interest rate pause, younger Australians were more optimistic than other age groups.

18% of 18-30-year-olds think the April rates pause is a sign rates will start to come down at the end of the year. This compares with:

  • 15% of 31-50s
  • 14% of over-50s

20% of 18-30s think April was an anomaly and rates will continue to rise over the next few months. This compares with:

  • 25% of 31-50s
  • 27% of over-50s

Only 8% of 18-30s think the RBA will raise rates by smaller percentage points in the next few months, compared with:

  • 19% of 31-50s
  • 21% of over-50s

What do you think about the Reserve Bank's decision to put interest rates on hold on 4 April? By age

What do you think about the Reserve Bank's decision to put interest rates on hold on 4 April? By age.

By state, more respondents from South Australia think rates will continue to rise than any other state, with 30% thinking April was an anomaly and 26% thinking rates will continue to rise in smaller percentage points over the next few months. The same amount of Victoria and Queensland respondents (18%) agree that the April hold is a sign that rates will start to come down towards the end of the year. This is followed by:

  • 15% of respondents from NSW
  • 11% of respondents from South Australia
  • 11% of Western Australians

What do you think about the Reserve Bank's decision to put interest rates on hold on 4 April? By state

What do you think about the Reserve Bank's decision to put interest rates on hold on 4 April? By State.

Do Australians trust the RBA will get the balance right between interest rates, inflation, and the ability among Australians to afford their loan repayments?

Money asked respondents if they trust the RBA to get the balance right between interest rates, inflation, and Australians being able to afford loan repayments, 60% responded no.

Do you trust the RBA will get the balance right between interest rates, inflation, and the ability among Australians to afford their loan repayments?

Do you trust the RBA will get the balance right between interest rates, inflation, and the ability among Australians to afford their loan repayments?

Almost two-thirds of 31-50s don’t trust the RBA to get the balance right. This compares with:

  • 58% of 18-30s.
  • 58% of over-50s.

Do you trust the RBA will get the balance right between interest rates, inflation, and the ability among Australians to afford their loan repayments? By age

Do you trust the RBA will get the balance right between interest rates, inflation, and the ability among Australians to afford their loan repayments? By age.

Across the states, respondents in Victoria do not trust the RBA to get the balance right (chosen by 66%). This compares with:

  • 63% of Western Australians
  • 63% of respondents from South Australia
  • 57% of respondents from NSW
  • 55% of Queenslanders

Do you trust the RBA will get the balance right between interest rates, inflation, and the ability among Australians to afford their loan repayments? By state

Do you trust the RBA will get the balance right between interest rates, inflation, and the ability among Australians to afford their loan repayments? By State.
Shaun McGowan Money.com.au founder

Written by

Shaun McGowan

Shaun McGowan is the founder of Money.com.au. He's determined to help people and businesses pay as little as possible for financial products, through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

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