Interest rates just rose by 0.25%. What does it mean for your mortgage?
The RBA said, ‘well we’re not here to f*** spiders,” and meant it. The cash rate has gone up…again!
This time, the cash rate has gone up by 0.25% - so we've gone from 3.85% to 4.10%.
Inflation has become the uninvited party guest, chugging all the champagne and refusing to leave. In fact, monthly CPI rose to 6.8% in the twelve months to April, which is higher than the March figure of 6.3%.
So it’s as clear as a skunk at a garden party, our economy isn’t hitting the brakes just yet.
But the truth is, this wasn’t a huuuge surprise. Economists were expecting a rate hike this month, after the Fair Work Commission increased minimum and award wages last week.
And, it's no secret that the RBA isn't done yet. They're still determined to knock inflation down to their goal of 2-3%.
It's a funny one. It's fair to say nobody's bingo card had both:
But that's what happened over the past few months. And there are a number of key reasons why.
When the RBA increases the cash rate, the banks will almost always follow suit and raise the interest rate on your loan.
Experts say it takes around two or three months for individuals to feel the full impact of a rate rise on their cash flow… so the impact of these successive rises won’t be felt until the new year.
And your interest rate on your savings account should increase too (but often doesn’t increase to the same extent).
Here’s a breakdown of how rate rises could impact your home loan if you’ve got a variable rate:
You’re not imagining it, they are! But it probably feels even higher because as recently as last May, interest rates were at a historic low of 0.1%.
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