For the fourth month in a row, the RBA raised rates by 0.5% to 1.85%.
👉 Background: The Reserve Bank of Australia (RBA) manage our monetary policy. In other words, they try to make sure that our financial system is stable.
👉 What happened: Over the last three months, RBA has gone haaard to drive down inflation. We've seen the cash rate jump from a measly lil 0.1% to a much-larger 1.35%.
👉 What else: But that's not all. Ohhh noo. Yesterday the RBA raised rates for a fourth month in a row by 0.5% to 1.85%. And these consistent rises are also spooking the bejesus out of prospective home buyers.
💡While the primary purpose of these cash rate rises is reducing inflation, it also has a major knock on effect on the mortgage market.
💡When the interest rate on mortgages increases, mortgage repayments become less affordable. Mortgage lending hit a record in the last 12 months to June this year, but in the last month we've seen the value of home loans fall by 4.4%.
💡 And the RBA ain't done yet... which will have a major effect on home loan lenders like the major banks, which have always seen mortgages as a cash cow.
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