Young parents Richard McLoughlin and Zoey Davenport said they were unaware of the threat of interest rates when they purchased their first home in Summer Hill earlier this winter.
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The pair, who are both living on fixed income pensions and have three children, including 5-month old Amelia (pictured), said the interest rate rises have shattered their budget and forced some tough decisions on the young family.
Their monthly mortgage payments jumped from about $800 to about $1000, and with the surging price of food and fuel, daily living is now a struggle, they said.
"If we knew that interest rates were going to go sky-high, we wouldn't have borrowed and purchased property," Mr McLoughlin said.
Ms Davenport said the family is already living from pay to pay, and saving money for a rainy day is a thing of the past.
"We've had to cut back on heaps of things, we can't even go on family trips, we are living from pay to pay now whereas before we were saving a bit of money, and chucking another [rate rise] on top makes things harder again," she said.
The family is one of thousands in Tasmania struggling as the Reserve Bank on Tuesday lifted its official cash rate target for the sixth month in a row, to 2.6 per cent, which would increase payments on a $400,000 30-year mortgage by about $60 per month.
Adrienne Picone, chief executive officer of the Tasmanian Council of Social Services, said the chain of interest rate increases this year has been especially tough on lower-income Tasmanian families.
"With every interest rate rise, coupled with the increased cost of essential goods and services across the board, household budgets are being squeezed tighter and tighter," she said.
"This is yet another blow to people on low and modest incomes already struggling with cost of living pressures. It will not only increase the cost of housing for those repaying a mortgage, but result in higher rents if passed on by property investors," she said.
She said that, combined with the other cost of living increases, the rate hikes would force low-income Tasmanians to cut back even further.
"We heard many people skipped meals, or bought junk food because it was cheaper than fresh fruit and vegetables. Others didn't use heating. Many had teeth removed because that was cheaper than regular dental care," she said.
A recent report by research firm Roy Morgan found that about one million, or nearly 20 per cent of mortgage holders in Australia were at risk of "mortgage stress".
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