The RBA has raised the cash rate now for the tenth straight time, taking it to 3.60%. What does that mean to you. Below we’ll explore the impact to monthly repayments, and if there are more rate rises on the horizon?

The RBA’s latest move takes the cash rate to its highest level since May 2012.

However, there could be good news on the horizon. RBA Governor Philip Lowe has softened his language around the timing of future rate hikes.

While last month he said “further increases in interest rates will be needed over the months ahead”, no such statement was included in this month’s rate hike announcement.

In assessing when and how much further interest rates need to increase, Governor Lowe said the RBA board will be “paying 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,” he added.

How much could this increase your mortgage repayments?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan very shortly.

For example, if you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest. This month’s 0.25% increase means your monthly repayments could increase by $75 a month. That’s an extra $985 a month on your home loan compared to May 2022.

On a $750,000 loan, repayments will likely increase by about $112 a month, up $1478 from May 2022.

On a $1 million loa, repayments will increase by about $150 a month, up about $1,980 from May 2022.

What happens if the cash rate increases further?

The big four banks are forecasting that the cash rate will peak at either 3.85% (CBA’s prediction) or 4.10% (NAB, Westpac and ANZ).

Assuming you’re an owner-occupier with a 25 year loan, here’s how much more you could be paying each month if the cash rate reaches 4.10%:

  • $500,000 loan:approximately $75 extra per rate rise = up $1135 from May 2022 to a total of $3,470 per month
  • $750,000 loan:approximately $112 extra per rate rise = up $1702 from May 2022 to a total of $5,200 per month
  • $1 million loan:approximately $150 extra per rate rise = up $2280 from May 2022 to a total of $6,950 per month

But above are just the big banks. There are many options available to you where you can obtain a lower rate, but still maintain all the features and convenience you may want such as online banking, free redraw, free off-set. It pays to look around now to save money.

Worried about your mortgage? We can help.

There’s no denying that a lot of households around the country are feeling the pain of these rate rises.

There are also lots of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends.

Some options we can help you explore include refinancing (which could include increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

This is where our lending specialists come in. A free review and a bit of advice can help you save money now or prepare better for the future.

Our lending specialists are available 7 days a week via phone, web chat, or in person to help you decide if a home loan refinance is a good option for you.

Check out our guide on home loan refinancing!

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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.