Illawarra homeowners could face new levels of financial stress, as all four major banks predict another rise in the cash rate in May.
The Reserve Bank of Australia has raised interest rates to 4.1 per cent, citing persistent inflation above its 2 to 3 per cent target as the main cause.
Haus of Loans director Renee Robins director said young families in the Illawarra are facing an uphill battle.
“With every rate increase, the borrowing capacity of prospective homeowners goes down, and the dream of home ownership gets further and further away,” she said.
According to Cotality’s November 2025 report, new home-owners in the Illawarra are required on average to spend 59.8 per cent of their income on their mortgage.
In context, an entry-level home in the Illawarra is estimated to cost $850,000 as of June 2025, compared to $585,125 in June 2020.
A decade ago, when interest rates sat at an all-time low of 2 per cent, the national benchmark hovered around 30 per cent; and today it has doubled.
The RBA’s most recent decision was split, as five board members voted in favour and four against. This suggests that borrowing costs may not climb as aggressively as initially thought. While 2025 brought brief relief for homeowners – with the cash rate dropping to 3.6 per cent – 2026 appears to be following a far more difficult path than previous years.
Ms Robins said the pressure has changed the way her clients think about property.
“We are seeing clients who are now going, maybe I don’t buy a property to live in, maybe I should buy an investment and stay living at home,” Ms Robins said.
“The prices are strong in the Illawarra; most people can’t afford it unless you have two incomes.”
With the median house price in the Illawarra sitting at approximately $1.35 million, and the data from the Wollongong City Council showing house prices have grown at an average of 8.8 per cent per annum over the five years to June 2025, the path to home ownership is narrowing quickly.
