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Australia Interest Rate Increase

Australia interest rate increase

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Reserve Bank surprises markets with a 0.25% rate rise

The Reserve Bank has surprised financial markets and increased interest rates by 0.25%. The RBA monthly statement says the cash rate increased by 0.25% to 2.60%.

When considering the size of the increase, the RBA board appears to be focusing on reducing inflation against the backdrop of falling house prices in many areas of Australia, a weakening Australian dollar and concerns of a global recession.

Acknowledging that the official cash rate had increased “substantially in a short period”, RBA Governor Lowe said the Board had decided on a 25-basis point increase in October as it continued to assess the inflation outlook and economic growth in Australia.

“Today’s further increase in interest rates will help achieve a more sustainable balance of demand and supply in the Australian economy. This is necessary to bring inflation back down,” Lowe said in Tuesday’s statement.

increase rates

Over the past six months, the RBA has delivered a number of interest rate rises aimed at “normalising” the cash rate amid surging inflation, which is at around 30-year highs and heading higher.

Rates have climbed from a record low of 0.1 per cent in April to now sit at their highest since 2013. The 0.25ppt increase would increase monthly repayments on a $750,000 mortgage by $110 once the banks pass on the rate rise. This would take repayments $1030 higher since the first rise in the current cycle in May, according to mortgage broker What If We Finance.

Against the backdrop of rising rates borrowing will be getting harder. Independent Mortgage Broker What If We Finance all to review their home loan to see if there is a better deal available as banks treat new and existing customers differently?

For more detailed information, Contact What If We Finance today.

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