As universally expected, the RBA made the decision to raise the cash rate at their June meeting, however, the 50 basis point hike was larger than expected. The latest move takes the cash rate to 0.85%.
With the cash rate up, it’s highly likely variable mortgage rates will rise by the same or a similar amount over the coming week, taking the average variable interest rate for a new owner-occupier loan to around 3.16%. Together with the 25 basis point increase handed down last month, the cumulative 75 basis point lift in mortgage rates will add approximately $200 per month in additional repayments on a $500,000 mortgage compared with mortgage rates in April.
The key drivers for the cash rate increase include:
- DOMESTIC ECONOMY: Resilient, and growing by 3.3% over the year.
- INFLATION: Increased significantly, yet still lower than most advanced economies
- BUSINESS: Wages growth, driven by a tight labor market and increased living costs
- HOUSEHOLDS: Household spending is under scrutiny as living expenses increase.
- EMPLOYMENT: Unemployment rate declined to 3.9%, the lowest rate in 50 years
If you need assistance navigating these changes, please don’t hesitate to reach out at any time or even just for a chat.
Arranging finance can be stressful, especially with some lenders now taking extra steps including going through your living expenses and credit scoring (ouch!). And sometimes banks can make you feel like ‘just a number’. That’s why we want to do things differently: because you deserve better.
As a local family-owned business, our team takes the time to listen, answer your questions and make getting your home, car or equipment loan as easy as possible.
