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RBA Increases Cash Rate By 0.25% But Has Inflation Peaked?

Cash Rate RBA History

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The Reserve Bank has increased the cash rate as expected for the tenth consecutive time by 0.25%. The new cash rate is 3.60%. Independent Mortgage Broker What If We Finance advises with the exception of the January 2023 holiday hiatus, the RBA has increased interest rates by 10 consecutive times.

With a $604,000, today’s increase will increase repayments by almost $100 per calendar month. With the same mortgage, all rate rises since early 2022 have added $1190 to monthly repayments.

This does not capture the impact of people moving of fixed rates, and the effect is expected to be more pronounced as these customers were on historically lower rates. All these rate rises are referred to as the mortgage cliff and are expected to have a big impact on inflation and consumer confidence.

RBA march update

However, the question mortgage broker Melbourne What If We Finance poses will the pace of rate rises subside or slow down?

The Reserve Bank in its latest statement has said:

“The monthly CPI indicator suggests that inflation has peaked in Australia. Goods price inflation is expected to moderate over the months ahead due to both global developments and softer demand in Australia. Services price inflation remains high, with strong demand for some services over the summer. Rents are increasing fastest in some years, with vacancy rates low in many parts of the country.“

Your mortgage broker, What If We Finance, has previously advised the priority of the Reserve Bank is to return inflation to its target range of 2-3% pa and once inflation peaks. It starts to fall, we can expect to see interest rate rises pause.

The RBA also stated:

RBA statement

“In assessing when and how much further interest rates need to increase, the board will pay close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

What this means for interest rates will effectively depend on several factors, and keeping a close eye on the home loan is important.

Contact your mortgage broker to see if you are still on the best deal. What If We Finance is available 7 days a week to help you find an unbeatable deal.

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