Australians could soon be paying an extra $159 to $318 a month, as higher mortgage repayments take effect this week and private health insurance premiums rise from April 1, according to reporting by Yahoo Finance Australia.
The increase in mortgage costs follows the Reserve Bank’s 25 basis point rate hike on March 17, which brought the cash rate to 4.1%. All four major banks are passing on the increase in full from March 27.
Finder estimates that a homeowner with a $500,000 mortgage will pay an additional $159 a month after the latest rate increases. Repayments rise by $238 for a $750,000 loan, and by $318 for a $1 million mortgage.
At the same time, private health insurance premiums are set to increase by an average of 4.41%, following approval by Health Minister Mark Butler in February. The rise is the largest since 2017, but actual increases vary depending on the level of cover.
Choice said gold-tier policies from the five largest insurers are seeing the biggest increases, averaging 13.3%. Over the past five years, approved increases have reached 14.8% across policies and 71.1% for gold-level cover.
Choice health insurance expert Mark Blades said some of the pressure on gold-tier premiums is linked to how insurers reprice policies.
“The higher price increases for these Gold policies are partly caused by ‘phoenixing,’ where insurers close older policies to new members and open new, identical policies with the same name at a higher price. The government introduced legislation last month to outlaw the sneaky ‘phoenixing’ loophole used by insurers. Unfortunately, we are still seeing top-level cover becoming increasingly unaffordable,” Blade said.
Canstar data insights director Sally Tindall said the increases are landing as households continue to deal with rising everyday costs.
“Between surging grocery bills, skyrocketing petrol prices, the end of electricity rebates and rising health insurance premiums, household budgets could well be breaking at the seams on the back of this news,” Tindall said.
With health insurance changes taking effect on April 1, Canstar said those considering prepaying their premiums may need to act soon. Some insurers require BPAY payments by March 26, while others have deadlines as early as March 25.
Most insurers allow customers to prepay up to 12 months at current prices, while HCF and HBF allow up to 18 months.
“If you wait until 31 March to decide, the decision might well be made for you, particularly if you’re wedded to paying by BPAY or direct debit. Pre-paying can potentially be a great opportunity to avoid the premium increase, but don’t automatically assume that’s the case,” Tindall said, adding that households should also compare policies before making a decision.
“If you are committed to prepaying, it’s worth checking you’re on a competitively priced plan, because in some cases, switching might generate even greater savings - especially if you’re then able to prepay with the new insurer. However, know that paying a year in advance doesn’t lock you in to your insurer. If you do decide to switch later this year, your old fund should refund any unused portion.”
