The RBA interest rate decision is in… and there has been another cash rate rise by 0.5% to 1.85%.
Over the past few months, the first Tuesday of every month has become a pretty big deal.
It’s become like a monthly Grand Final for the 6 million mortgage holders in Australia who are waiting on the whim of the Reserve Bank of Australia (RBA).
And now the Reserve Bank of Australia has hiked interest rates again. The 0.5% increase brings the official cash rate to 1.85%.
Are we surprised? Not really! Are we disappointed that home loans are going to become more exxy? Absolutely.
But inflation is popping off faster than The Kid Laroi’s career and rates need to go up to help keep a lid on the problem.
Now the RBA has said it wants to get the cash rate up to 2.5% over time.
If you’ve got a variable rate home loan (or if part of your loan is variable), it might be time to tighten your budget a little. Why? Well, when the official cash rate goes up, the banks usually follow suit and increase home loan interest rates by the same percentage. If you have a fixed-rate loan, it’ll stay fixed for the fixed period.
Here’s a breakdown of how your repayments will likely change based on a 25 year repayment term:
Quick recap: the official cash rate is the amount of interest that banks pay when they borrow money (yep, banks - they’re just like us!).
The RBA decides what the official cash rate is on the first Tuesday of every month (except January). Once it makes its call, banks and lenders tend to change their interest rates on savings accounts and home loans (generally, in line with the official RBA cash rate).
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