The Finance Brokers Association of Australia (FBAA) says research from others has backed up its recent warnings of two economic storm fronts, and that they may be about to clash, forcing thousands of Australians out of their homes and sending rental prices soaring.

FBAA interim CEO Peter White AM said today’s expected RBA interest rate rise, added to this month’s predicted federal government changes to capital gains tax and negative gearing, could be “a toxic mix of pain and devastation.”

“Surely driving investors out of the market while at the same time increasing interest rates can only result in increased mortgage repayments and higher rental prices,” he said.

“I’m not an economist but it’s not rocket science that this affects lower income earners more than anyone else.”

Mr White said the FBAA warned before the last interest rate hike of added cost of living pressures due to the Middle East conflict, and this has now been supported by recent research from Finder showing that nine per cent of mortgage holders – or 297,000 people – would default on their mortgage if there are one or two more interest rate hikes.

“This is consistent with the FBAA’s research since 2021 before rates started to rise,” he said, adding that “we urged the RBA to start increasing rates more gradually at that time but no one listened.”

The association last month also called on the Federal Government not to make changes to capital gains tax and negative gearing, saying at the time that “the only result of any move to disincentivise investors, including those who own multiple properties, will be to increase the cost of living for anyone who rents.”

Now research from SQM Research has added weight to their claim, predicting a 20 per cent increase in capital city rents if the changes proceeded.

“These tax changes won’t lead to any positive effect but will mean that someone renting with the aim of buying a home won’t be able to save a deposit as easily, while many who are renting because they are already doing it tough will struggle to meet the increased repayments,” he said.

Mr White said there is still time to reverse course.

“These are not economic factors beyond our control, but decisions that are directly leading to darker times for many, and I hope both the RBA and federal government can change course before it’s too late.”