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RBA raises cash rate to 4.10%


The RBA makes it 12 rate rises in 13 months.

The Reserve Bank of Australia (RBA) has raised the official cash rate by 25 basis points to 4.10%, the highest rate since 2012.

Despite many homeowners already feeling the pinch, stubbornly high inflation has given the RBA little choice but to raise the cash rate yet again.

As usual, this means mortgage holders with variable rates are looking at higher repayments, while savers could expect a better return on their money.

What next for rate rises?

As evidence of how volatile the market is, economist forecasts have significantly changed since the latest inflation figures were released.

Each month we ask a panel of experts where they think the cash rate will peak and this month the average increased by about 35 basis points, with a jump from 3.8% to 4.17%.

The majority (67%) also believe that this peak will be before September, so we are expecting more rate hikes over the next couple of RBA decisions.

That might sound scary, but there is better news for the long term!

Finder's head of consumer research, Graham Cooke, said, "the flood waters should start to subside" after the next 2 rate rises. Inflation is expected to slow and 85% of the economists believe Australia will be back at the 2% target in the June quarter next year.

"Inflation has bumped up a tad in April, but is still well below its December peak. The long-term forecast from our panel is for inflation to continue to decline, which should mean the cash rate does too," Cooke said.

What to do if you're struggling with your home loan

According to figures released by S&P Global, mortgage arrears rose over the first quarter of 2023. The report also called out refinancing becoming tougher for borrowers which is adding to arrear pressure.

If you're worried about being in mortgage stress, Finder recently built a calculator so you can see exactly where you stand.

Mortgage stress calculator
Enter your current mortgage details
What is your household income annually (pre-tax)?
How much is left on your loan?
Years left to pay off?
Your interest rate p.a.?
Repayment type
Your age
Mortgage stress results
In control
Monitor your finances
At risk
In mortgage stress
Your max interest rate before stress =
5 Steps to mortgage empowerment:
Step 1 - Refinance to a cheaper home loan
Step 2 - Get expert tips to save money on bills and reduce your everyday expenses.
Step 3 - Get your budget in tip top shape and consolidate debts.
Step 4 - Ask your bank about its hardship policies or use a broker to find a debt solution.
Step 5 - Call the National Debt Helpline - 1800 007 007.
The mortgage stress calculator is not a complete assessment of your financial position. It is a general guide only. There are many additional factors unique to each individual mortgage that borrowers should take into account. Results are only as accurate as the information entered by the user. We recommend speaking to your financial adviser, mortgage broker or lender when considering your financial position and mortgage decisions.
You're in mortgage stress, but you don't have to figure your way out of this alone. If you're struggling to make ends meet due to mortgage stress, there are steps you can take to get into a better position. We have some guides for you below to help you compare your current costs to reduce your expenses, and also work with your bank to manage your situation. If you're struggling to stay on top of your financial commitments, you could reach out to a mortgage broker for personal advice (they're free!).
You're not in mortgage stress – yet – but you're at risk of falling behind if you're not careful. Definitely start budgeting and look for ways to pay less on your household bills by comparing your everyday expenses to find cheaper deals. Comparing your home loan is a good place to start, and we have other guides that can help you below.
You're doing okay; there's no need to panic. But it's a good time to start thinking about your budget and making sure you're not caught off guard by a sudden unexpected expense. Get back in the green and start paying less for your loan by refinancing to a cheaper rate.
Congratulations! You're doing well. Make sure you check back as your situation changes. Remember, it's always a good time to compare your rate with other loans on the market so you're never paying more than you need to, and it never hurts to pay less for everyday bills. Get the Finder app to start saving today.
Like many Australians, you're doing it tough. You do have tools available to you to turn it around, as some banks have hardship policies that can pause or lower your repayments. If that doesn't help, you may need to consider selling or moving, but before you make any drastic decisions, contact the National Debt Helpline for support.

If you are struggling with your mortgage repayments, here are some things you can try:

  1. Take a look at your budget. Depending on the level of how much you are struggling, this may not help. But it's a good place to start. Take a look at what you've got coming in and then write down everything you have going out. You might need to be really strict on where you cut back.
  2. Speak to your lender. People often assume that banks won't care, but that's not actually true. Many banks are supporting their borrowers with hardship assistance, which could be through repayment pauses, lower interest rates or temporarily moving you onto an interest-only plan.
  3. Consider refinancing. The market is making it harder for a lot of borrowers to refinance, but it's worth looking into now before things get worse. You might be able to refinance your interest rate with your current lender, or another lender may be able to offer you a better deal.
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