RBA holds cash rate
In a move not seen in almost 12 months, the RBA has hit the brakes to hold the cash rate at 3.60%.
The Reserve Bank of Australia (RBA) is holding the national cash rate at 3.60%, providing some light relief for homeowners, but adding more uncertainty over where rates go from here.
It was arguably the most anticipated rate meeting since the RBA began raising rates back in May 2022, and marks the first pause after 10 consecutive rate rises.
What this could mean
The decision to hold should give mortgage holders a potential respite and could signal a change in direction for the RBA in its fight against inflation.
However, further rate rises are still on the table, especially if inflation stays above the RBA's target range of 2-3%.
It's also likely to mean that savings rates will plateau for now, with the most competitive rates currently around 5% p.a.
If this is the end of consistent cash rate rises, there could be huge implications for property prices and the cost of living crisis.
It would mean the RBA believes inflation could be coming under control, which would ease cost of living pressures, but also see recent house price drops reversed.
Brief reprieve for homeowners
The decision to hold should give homeowners a month without an increase to their home loan rate.
Since last April, the monthly mortgage repayment on an average home loan of $600,000 has increased by $1,111.
According to Finder's recurring Consumer Sentiment Tracker (CST), more and more Australians are struggling with their mortgage repayments.
36% of Aussies surveyed in March said they were struggling with their home loan, up from 24% in May last year when the rate rises first began.
The higher loan repayments are in addition to the higher costs of everyday living that Aussies are facing.
The CST found that only 19% of Australians are "not at all stressed" with their current financial situation.
Tips if you're struggling with loan repayments
- Review your home loan. Your lender will likely pass on today's rate rise in a week or so. It really helps to know what your rate currently is.
- Check if your current lender has a better deal. Sometimes your own lender has a better deal on its website. The catch? It's for new borrowers, not loyal, existing borrowers. If you call and ask, your lender will most likely match the rate.
- Refinance to a lower rate. If you can't get a better deal with your lender then start looking at rates from other lenders and look for a better deal. Even a slightly lower rate can save you quite a bit. Refinancing is not as hard as you think.
- Find other ways to budget and cut back. While your home loan is probably your biggest expense, see if you can't find savings on groceries, insurance or other big expenses.
If you can't make repayments, talk to your lender. If the rate rises have pushed you beyond your limits completely, talk to your lender. You may be able to negotiate a repayment holiday, interest-only repayments or some kind of hardship assistance scheme.
