iscover
According to the Australian Bureau of Statistics (ABS) mortgage interest charges lifted by 91.6 per cent over the year to June 2023, compared to the 78.9 per cent increase reported in the previous quarter of March 2023.
The surge came as a result of banks passing on rate hikes implemented by the central bank.
Despite the Reserve Bank of Australia (RBA) maintaining a steady cash rate of 4.1 per cent for the past two months, the continuous rise in interest rates is causing financial strain on households.
This increase is “taking up a larger portion of their spending”, Michelle Marquardt, the head of prices statistics at the ABS said.
Ms Marquardt explained that the rising interest rates have led to living cost increases ranging from 6.3 per cent to 9.6 per cent, depending on the household type.
The ABS data indicates that all types of households have experienced living cost rises that are equal to or exceed the June quarter Consumer Price Index (CPI) figure at 6 per cent.
Ms Marquardt explained the difference between the Living Cost Indexes and the CPI – the former includes mortgage interest charges, whereas the latter focuses on the cost of constructing new dwellings.
Ms Marquardt said the increases in living costs “are all higher than the 6.0 per cent annual increase in the CPI”.
Among various household types, ‘employee households’ have witnessed the most significant annual increase in living costs, soaring by 9.6 per cent.
This marked the highest jump since the series began tracking in 1999.
Conversely, other groups like self-funded retirees, who rely on superannuation or property income, experienced relatively lower rises, with a modest 0.8 per cent increase. The Pensioner and Beneficiary Living Cost Index (PBLCI) saw a rise of 1.1 per cent.
The ABS data also pointed out that the rollover from expired fixed-rate mortgages to higher-rate variable mortgages has contributed to the mounting living costs.
As interest rates soared over the past year, borrowers who had previously secured loans at extremely low rates in 2020 and 2021 are now transitioning to variable-rate loans at rates two to three times higher, resulting in substantial cost burdens.
Over the past year, increased living costs have been further compounded by higher food and utility prices.
Food prices surged by 7 per cent to 8 per cent, driven by notable increases in the cost of dining out, takeaway foods, and fruits and vegetables.
Meanwhile, utility prices witnessed a substantial rise of 12 per cent to 14 per cent, largely attributed to elevated wholesale prices for gas and electricity, which were subsequently passed on to consumers.
In addition, insurance premiums rose across house, house contents, and motor vehicle insurance.
ISCOVER 
