For the first time in over 11 years, the Reserve Bank of Australia (RBA) has increased the cash rate by 25 points, from 0.10 per cent to 0.35 per cent.
Since the announcement on the 3rd of May, all four big banks have passed the interest rate rise onto customers.
The rate rise has been on the horizon for quite some time, and according to leading property analysts, Queensland homeowners need to prepare for more interest rate rises in the coming months.
“The RBA will probably be lifting rates every month all the way through to the end of the year, so all of a sudden, you’re getting a cash rate that’s already up by say, 150 basis points,” CoreLogic research director Tim Lawless said.
The rate rise has been expected to combat the rapidly rising inflation rate, with the decision said to not be influenced by politics.
AMP Capital chief economist Shane Oliver said delaying the increase would have risked a “rise in inflation expectations, making it harder to get inflation back down”.
How Will The Rate Rise Impact My Home Loan?
Based on an owner-occupier paying principal and interest with 25 years remaining on the average variable rate of 2.92% assuming the banks pass the cash rate hike on in full.
|Loan size||Rate change||↑ 0.25% – Monthly increase|
|$500,000||2.92% ➡ 3.17%||$65|
|$750,000||2.92% ➡ 3.17%||$98|
|$1,000,000||2.92% ➡ 3.17%||$130|
The national leader of finance solutions at BDO, Darren Stacey, said “Borrowers should start shopping around for the best deal. If their financial position has improved since they last spoke to their bank, they should approach them again. They may be eligible for a lower interest rate which will offset some of the potential cash rate rises.”
If you would like to discuss the impacts of the interest rate hike and the best next steps for your home loan, our experienced team of mortgage brokers are here to answer any of your questions. Contact our Finance team at firstname.lastname@example.org or give us a call at 07 3367 3155 .