The Reserve Bank of Australia (RBA) just recently increased the cash rate for the tenth consecutive meeting by another 25 basis points, raising it to 3.60%. This is one of many measures taken by the RBA board in an effort to help stimulate Australia's economy.
RBA Governor Philip Lowe explained that this rate increase was necessary since inflation is still too high. But he added that Australia has been in a better position than some other nations due to the country's modest wage gains so far. (source: theguardian)
Homeowners are feeling anxious once more as a result of this significant rise in the cash rate, especially those who are already having difficulty managing their financial condition.
According to Governor Philip Lowe's statement during a conference in Sydney, the nation is already ‘closer’ to pausing its record series of interest rate rises.
However, ‘further increases in interest rate over the months ahead’ are not mentioned in this month's rake hike announcement.
He stated in a release that the board anticipates that additional tightening of monetary policy will be required to guarantee that inflation returns to target and that this high inflation period is only temporary since higher interest rates and increased unemployment would result if inflation didn't return to normal.
That’s why they will be paying close attention to the developments in the global economy trends in household spending and the outlook for inflation and the labour market.
Data groups have found that if commercial banks pass on the full cost of additional repayments on a typical $500,000 mortgage, it will have increased by around $1,000 per month since May.
If you have a $750,000 loan, your monthly repayments might be around $1478 from May. On the other hand, a $1 million loan will go up to $1980 from May.
When confronted with rising interest rates, it is important to consider your financial goals and individual risk tolerance.
To help manage the impact of higher rates, you should start by creating a budget that accounts for rate increases. This includes reviewing debt and loan payments, understanding what will happen if you are unable to make these payments in full, and exploring options such as refinancing.
In addition, you should consider diversifying investments to include higher-yielding, short-term options such as bank certificates of deposit. Finally, it is important to keep an eye on market trends and understand the potential implications of rising interest rates for your financial plan.
You're not the only one who is concerned about rising interest rates because more homeowners are also beginning to feel the squeeze, and there is no reason to panic. You can navigate these waters and obtain a loan that works for you with the assistance of our Melbourne mortgage broker.
You can count on our team of professionals to help you comprehend your possibilities and locate a loan that meets your requirements because we will do everything we can to make sure you are happy with your new loan and will work with you to find a rate that won't break the bank.
Schedule a call with us today if you're ready to explore your options and we'll be happy to answer any questions you have and get you started on the path to a new loan.
