Despite the predicted hold-off on a rate hike, the Reserve Bank of Australia (RBA) has increased the official cash rate for the 11th time taking it to 3.85%. This decision will no doubt prove challenging for many households around Australia as they struggle to keep up with rising costs and inflation.
The RBA's decision may have come as a surprise to some, but it is indicative of the current economic conditions in Australia and is likely to continue unless there are significant changes on the horizon.
The Reserve Bank of Australia (RBA) announced an increase in interest rates on Tuesday, citing the need to bring inflation back within its target range. RBA Governor Philip Lowe said that while inflation had passed its peak, it was still too high at 7% and it will take some time before it goes back to the target range which is 2-3%. He stated that “given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today.”
The Reserve Bank of Australia's Governor Philip Lowe also made a statement that softened his language around the possibility of further rate hikes. Although he suggested that some tightening of monetary policy may be necessary, he also indicated that this will depend upon how the economy and inflation are shaping up. (source: Forbes Advisor)
This news is upsetting to mortgage holders who have already struggled with rising interest rates, and it won't bring any comfort to families who were anxious about anticipated future increases. But overall, this statement shows that the RBA is closely monitoring the economic and inflationary environment and may seek to alter monetary policy as necessary.
Understanding rate hikes and how they can affect your monthly repayments as a homeowner is important. Because even while a rate increase will result in higher payback amounts, there are still things you may do to lessen the financial impact.
Reviewing your current mortgage's terms and repayment plan is the first step. Think about your choices, such as refinancing or putting down a bigger down payment. Keep an eye on interest rates as well, and lock in your mortgage rate when it's the cheapest. Making additional payments when interest rates are low if you can, can also help you ultimately pay less each month.
Finally, it's critical to think about how to cut or eliminate expenses that are unnecessary. This can entail downsizing your residence or limiting unneeded purchases. In order to be ready for any prospective rate rises in the future, be sure that you are budgeting and saving for a rainy day.
Remember that understanding rate hikes and taking proactive steps to minimise their impact, can protect your financial stability. So with proper planning and preparation, you will be better equipped to handle any changes in your monthly mortgage repayments.
Our mortgage brokers understand the uncertainty and financial stress that comes with rising interest rates. That's why we are here to help you find a loan solution that works for you so you can make informed decisions about your financial future.
Don’t let rising interest rates cause you financial stress - take control by speaking to one of our experienced Melbourne mortgage brokers today. Get in touch with us to arrange a call and get started on the path to finding the right loan for you. We look forward to helping you make informed decisions about your finances!