Melbourne's Best Independent Mortgage Broker - available 7 days a week

RBA Rate Rise September

RBA rates increase

Share This Post

RBA rates increase by 0.50% for September 2022

As expected, the Reserve Bank of Australia (RBA) today increased the official cash rate by 0.50% to 2.35%. We are now waiting to see how banks and lenders will react.

This brings the total of increases made since May to 2.25%. The RBA is continuing to fight inflation proactively.

The RBA has made its priority very clear to control inflation and this means house prices may be impacted further.

It is the bank’s most aggressive tightening of official rates since 1994 and the first time it has ever lifted rates at five consecutive meetings.

The move, expected by markets and economists, will add $242 to the monthly repayments on an $800,000 mortgage. Since the RBA started lifting rates in May, the cumulative increase in repayments is now more than $1000 a month on an $800,000 loan.

Australian Bureau of Statistics data on Tuesday showed household spending in July was 18 per cent higher than a year earlier, and the ABS’s retail trade data show record monthly shopping in stores and cafes.

Economists believe the $270bn in additional cash saved through the pandemic has given a buffer to many households, while low and middle-income taxpayers receive $12bn back on their taxes thanks to the special tax offset worth up to $1500 provided in the last budget.

interest rate graph

Many borrowers fixed their mortgage rates over the past two years, with the bulk of these rolling over by the middle of 2023.

But analysts warn higher borrowing costs will increasingly weigh on activity through the final months of this year.

The impact of higher rates is clearer in a sharp property market downturn, following hard on the heels of a record housing market boom through the pandemic.

Mortgage broker What If We Finance advises a client to monitor their home loans and contact us to find out if there is a better deal as lenders can move independently of the RBA.

Get updates and learn from the best

Subscribe To Our Newsletter