You are currently viewing RBA Hikes Cash Rate 25-Basis Points – up to 4.35-Percent

RBA Hikes Cash Rate 25-Basis Points – up to 4.35-Percent

On the day of the race that stops a nation, the RBA has increased the cash rate by yet another 0.25% taking it to 4.35%.   How will this latest hike affect your home loan repayments?

Tough Times for Mortgage Holders

It’s another challenging day for mortgage holders across the country.

Despite the official cash rate remaining unchanged since June, many were hopeful it would continue that way. However, the RBA has opted for yet another Melbourne Cup Day rate increase as it did last year which it describes as an effort to combat inflation.

This marks the 13th rate hike in the past 18 months since May 1, 2022, pushing the official cash rate to its highest level since November 2011.

Furthermore, this rate hike also marks the first major decision under the leadership of new RBA Governor Michele Bullock who took office in September.

So, what prompted the RBA to raise the cash rate?

Governor Bullock explained that although inflation in Australia had passed its peak, it remained too high and was displaying more persistence than anticipated a few months ago.

“While goods price inflation has eased further, the prices of many services are continuing to rise briskly.” she stated

“While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected.”

Governor Bullock emphasized that the RBA Board determined that an interest rate hike was necessary today to enhance confidence that inflation would return to the target within a reasonable timeframe.

She warned, “If high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment.”

Impact of the Latest Rate Hike on Mortgage Repayments

Curious about how much this recent rate hike could affect your mortgage repayments?

If you hold a variable-rate home loan, it’s probable that your bank will soon raise the interest rate on it.

For home-owners with a 25-year loan of $500,000, paying principal and interest, the 25 basis point increase this month could translate to an approximate monthly repayment increase of $76.

That’s an additional $1,211 per month on your mortgage compared to May 1, 2022.

For those with a $750,000 loan, repayments are expected to rise by around $114 per month, amounting to an increase of $1,816 compared to May 1, 2022.

Meanwhile, borrowers with a $1 million loan will witness an increase of approximately $152 per month, bringing their monthly expenses up by about $2,422 compared to May 1, 2022.

Struggling with Your Mortgage? Let Us Help

Are you feeling the financial squeeze? You’re not alone. Households across the nation are grappling with the impact of 14 rate hikes in the past 18 months.

Additionally, many individuals with fixed-rate home loans are contemplating their options as their fixed-rate periods draw to a close.

We can assist you in exploring various solutions, including refinancing (potentially extending your loan term to reduce monthly payments), debt consolidation, or building a financial cushion in an offset account.

If you have concerns about meeting your future repayments, don’t hesitate to contact us today on 1800-E-LOANS. The sooner we connect and create a plan, the more effectively we can assist you in managing your mortgage moving forward.

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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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