The Reserve Bank has steadily increased the cash rate over the past few months. This latest increase of 0.25 percentage points will take the cash rate to 3.10 per cent - a significant jump since May.
According to Governor Philip Lowe's statement, "Inflation in Australia is too high, at 6.9% over the year to October."
"Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role," Lowe said. "Returning inflation to target requires a more sustainable balance between demand and supply."
Reactions to the recent rate rises by the Reserve Bank of Australia have been conflicted. While some people welcome the change, others wonder if this will be the last rate increase announced by the RBA.
There's no denying that the recent interest rate increase is a blow to those with home loans.
Unless you have a fixed-rate mortgage, your repayments won't rise. However, this would probably result in an increase in repayments and a burden on household budgets for those whose home loan rates are variable.
While an extra 25 basis points may not sound like a huge jump, it can still significantly impact your budget. For example, if you have a $750,000 loan, your monthly repayments could increase by almost $110 a month.
The Board expects to gradually increase interest rates further over the coming months as conditions in the economy warrant. They are carefully analysing incoming data and assessing inflation and labour market trends so that they can make decisions about the direction of rates. This means that future increases may be larger or smaller than previous ones.
There may be some uncertainty around the size and timing of future rate changes. Still, the Board will continue to make decisions that are in the best interests of the Australian economy. (source: RBA)
With mortgage rates on the rise, it's understandable why many homeowners are feeling anxious. But don't worry - our experienced UFS Mortgage Brokers are here to help you!
Our team will help you find a loan that won't put too much strain on your wallet and that you feel confident about taking on. Plus, we'll be there with you every step of the way to answer any questions and keep you informed throughout the process.
So don't let rising mortgage rates get you down - give us a call and take back control of your finances!