The recent increase in interest rates is set to place significant pressure on homeowners in Victoria, as monthly mortgage repayments are expected to rise noticeably. On average, repayments could increase by around $90 per month, and with the possibility of further hikes, some households may face monthly losses of up to $200. This highlights a growing crisis for families already struggling with rising living costs.
Families living in growth areas across Victoria—such as Werribee, Tarneit, Craigieburn, Pakenham, and Geelong—are among the most affected by these developments. These regions rank among the highest in home sales across the state, making them key areas where borrowers are feeling increased financial strain.
Ari Levinson, Chief Financial Officer at Baseline Financial, noted that a 0.25 percentage point increase in interest rates would raise monthly repayments by more than $90 for average borrowers in most of these areas. Based on a PropTrack data model, Levinson analyzed the impact of such changes on 30-year loans with a loan-to-value ratio of 80%.
He added that two additional rate hikes could push monthly repayments up by between $180 and $200, with larger loans bearing a greater burden. He explained that financial pressure is particularly evident in areas like Tarneit, Pakenham, and Craigieburn, where buyers entered the market with relatively small deposits while also facing rising daily living expenses.
In Geelong’s growth corridors, financial stress is increasing among buyers who purchased during the COVID-19 market boom using high leverage. Similarly, in Melbourne’s outer suburbs, the impact of rising costs is especially pronounced among buyers who made significant efforts to enter the property market.
In comparison, the pressure in Geelong is also visible among buyers now facing higher household expenses as they move into new life stages. Overall, households remain on edge as interest rate increases continue to pose serious challenges for homeowners across Victoria.
