On Melbourne Cup Day at the November board meeting the Monetary Policy Board of the Reserve Bank of Australia (RBA) increased the official cash rate to 4.85%, the highest level since 2008.
The Reserve Bank has hiked rates for the fifth time this year, from 4.6% to 4.85%, in a bid to regain control of surging inflation amid the ongoing global oil shock triggered by the war in the Middle East.
The RBA’s decision to hit mortgage holders again comes as no surprise after inflation jumped to 4.3% in the year to September, and following tough talk from senior central bank officials over recent days and weeks.
The RBA’s cash rate has now reached its highest level since 2008.
Back-to-back hikes will heap more pain on over 3.3m households with home loans and turn the screws on a federal government under pressure for its economic management.
The latest increase will lift the monthly interest payment on a $700,000 home loan by $107, bringing the total rise in repayments over this year’s five hikes to $532.
In its post-meeting statement, the RBA Monetary Policy Board said: “Since the previous meeting, the data have confirmed that underlying inflation remains broadly based. Capacity pressures appear a little tighter than previously estimated and there are indications that higher fuel prices are being passed through to prices of other goods and services. Inflation is now expected to remain above 3 per cent for the coming year and there is an increasing risk that higher inflation expectations will become embedded.”
Jim Chalmers, the treasurer, said prior to the announcement that “people are under substantial pressure already”, adding that higher borrowing costs would “make things much harder”.
What you can do if your home loan is causing stress in your household
If the recent rate rises are putting stress on to your family budget here are a few suggested steps you can take:
- Engage with a lending specialist who can review your home loan and budget and provide professional help
- A home loan review may include negotiating a better rate with your current lender to lower your repayments, or a new lender with a more suitable home loan option for you
- A lending specialist can also review your full budget, make suggestions, and offering debt consolidation solutions if need be to substantially lower your monthly repayments
A free phone or web-based review of your home loan can take 5 minutes and can lead to removing the stress on your household budget.
It’s simple to get in touch with one of our local specialists and see hear how we can help you.
We know loans like we know homes.
We hope you found this article helpful. If you’d like to discuss it further please fill in the form below and we’ll be in touch.
"*" indicates required fields
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.