The cash rate rose .5 per cent to 1.35 per cent.
The reality for some borrowers is painful.
RateCity estimates the rise will add $137 a month to a $500,000 mortgage or $499 a month on a $750,000 loan if the banks pass on the full amount to customers.
So, back to the line about borrowers with large mortgages.
Some of them will be the very same people who have been crowing for years about how much their property is worth.
The lucky ones who got in at the right time have seen a doubling of value, but equally, plenty have remortgaged and extracted that value to fund their lifestyles.
Property Update reported only a few days ago that residential property prices rose 23.7 per cent through 2021, meaning that the collective value of the wealth of property owners increased by $2 trillion in just one year alone.
The RBA is comforted by the number of mortgage holders that got ahead on their repayments during the COVID pandemic when for long periods you couldn’t go out and spend it.
That will insulate the home market for some time and while the hallmarks of a property bubble are there, most analysts are not warning of impending doom.
Unemployment is low and anyone who wants a job should be able to get one. Housing demand is still strong and supply is short.
Housing Industry Association economist Tim Reardon made this forecast in May when it was clear the RBA would have to move on rates.
“As interest rates increase, the high growth cycle will stall and we’ll enter a different cycle where prices will decline but it’s difficult to see house prices falling significantly while we still have a shortage of supply,” he said.
According to the Real Estate Institute of Victoria’s Market Insights the median sale price for homes in regional Victoria has risen from $405,000 in Q1 2019 to $595,000 in Q1 this year.
Even taking into account the commutable zone around Melbourne this is a staggering shift.
Demand, in large part driven by population shifts from metro to regional, is still a factor and the pressure that has been placed on land supply will continue to play out in pricing in the medium term.
People will continue to climb the property ladder and the old maxim that every seller is also a buyer is true.
Despite the recent rate hikes we still have very low interest rates and any easing off will likely encourage first home buyers into the market.
I can’t see anybody suggesting that we are standing on a property cliff, but there will be some who will end up wishing they had invested in equity rather than lifestyle.
* Darren Linton is chief correspondent at McPherson Media Group
