Australian borrowers hit with a sixth straight interest rate rise – here’s what it will mean for you
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More pain for home borrowers as they are hit by the SIXTH rate hike in a row – but it could have been WAY worse: Here’s what a historic rise means for YOUR mortgage
- The Reserve Bank of Australia has raised interest rates for the sixth month in a row
- The 0.25 percentage point rate increase is less than expected 0.5 percentage point increase
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Australian home borrowers have endured a historic sixth consecutive monthly rate hike to tackle the worst inflation in more than three decades.
The Reserve Bank of Australia has raised its spot interest rate by 0.25 percentage point to a nine-year high of 2.6 percent, surprising financial markets and economists who had expected a larger increase of 0.5 percentage point.
The sixth consecutive rate hike is the largest in a row since the RBA began publishing a target cash rate in 1990 and marks the faster pace of monetary tightening since 1994.
A borrower with an average mortgage of $600,000 will now see their monthly mortgage payments increase by $89 to $3,055.
This rate hike is far from the last in this monetary policy tightening cycle, with inflation rising to its highest level in 32 years.
Australian home borrowers endured sixth consecutive monthly rate hike to tackle worst inflation in more than three decades
The Reserve Bank of Australia has raised the spot rate by 0.25 percentage point, taking it to a nine-year high of 2.6 percent, surprising financial markets and economists who saw a larger increase of 0.5 percentage point. expected
Total inflation, also known as the consumer price index, rose 7 percent in the period to July, the strongest increase since 1990, before falling to 6.8 percent in August.
But the Reserve Bank and Treasury both expect inflation to hit a 32-year high of 7.75 percent later this year as global supply constraints, China’s Covid zero policy and Russia’s war in Ukraine keep price pressures high.
Housing construction costs rose at an annual rate of 20.7 percent in August as fruit and vegetable prices skyrocketed by 18.6 percent after the recent floods.
Gasoline prices have risen 15 percent in a year, even after the previous coalition government cut excise taxes in half to 22.1 cents per liter for six months until the end of September.
The latest cash rate hike brings it above the 2.5 percent level that RBA governor Philip Lowe says is a neutral level.
Futures markets expect the spot rate to reach 4.1 percent in May next year, while Westpac forecasts an interest rate of 3.6 percent by February 2023.