You are currently viewing And exhale – Mortgage Borrowers relieved as the RBA keeps rates on hold this month

And exhale – Mortgage Borrowers relieved as the RBA keeps rates on hold this month

Thank goodness.  The Reserve Bank of Australia (RBA) has made the decision to keep the official cash rate unchanged in this month’s meeting.

This news comes as a relief to homeowners across the nation, especially considering the recent increase in monthly repayments by approximately $1,135 for a $500,000 loan over a 25-year period since May 1, 2022.

The RBA’s Governor Philip Lowe explained that the reason behind maintaining the current interest rates lies in the fact that there has already been a 4% increase since May of last year. By keeping the rates steady this month, the Board aims to assess the impact of these previous hikes and establish a more sustainable balance between supply and demand in the economy.

While this decision provides some relief, Governor Lowe did hint that there may be potential rate rises in the coming months. He emphasized that further monetary policy adjustment measures might be necessary to ensure inflation returns to the target within a reasonable timeframe. However, these future decisions will depend on the evolution of the economy, inflation trends, and the state of the labour market, as closely monitored by the Board.

Now, you may be wondering about the potential increase in your repayments if the cash rate were to rise. Let’s consider the scenario of an owner-occupier with a 25-year loan of $500,000, paying principal and interest. If the RBA were to raise the cash rate by an additional 25 basis points and your bank follows suit, you could expect your monthly repayments to increase by around $76, resulting in an extra $1,211 per month compared to May 1, 2022.

For those with a $750,000 loan, repayments would likely increase by approximately $114 per month, totaling an increase of $1,816 from May 1, 2022. Similarly, if you have a $1 million loan, you may experience an increase of about $152 per month, reaching around $2,422 more compared to May 1, 2022.

It’s understandable if you’re feeling concerned about your mortgage given these circumstances. Rest assured, you’re not alone. Many households across the country are facing the impact of multiple rate rises over the past 15 months. Additionally, those with fixed-rate home loans might be wondering about their options once their fixed-rate period comes to an end.

At times like these, we’re here to assist you in exploring various options tailored to your situation. Whether it’s refinancing, debt consolidation, or building up a buffer in an offset account ahead of potential rate hikes, we can guide you through the process. It’s crucial to address your concerns and create a plan sooner rather than later, as this will enable us to better assist you in managing any further rate increases.

If you’re worried about meeting your repayments going forward, please don’t hesitate to reach out to us today on 1800-E-LOANS. We’d love to sit down with you, understand your circumstances, and help you navigate these challenging times.

1800 35 62 67

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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