RBA serves borrowers its ninth rate rise: Here’s what it will cost you
Your loan repayments could rise by $90 a month.
The Reserve Bank of Australia (RBA) continued its fight against inflation today, raising the official cash rate target to 3.35%.
Australian borrowers can expect their lenders to add an extra 25 basis points onto their variable rate home loans in the next few days or weeks.
This is the ninth cash rate rise since the RBA started its current round of rate hikes back in May 2022.
Counting the cost of rate rises
The average Australian home loan (owner-occupier) is now $604,346 according to the ABS. And the lowest variable rate available through Finder is 4.44%.
This would give you a monthly repayment of $3,041.
But with today's rate hike that interest rate could jump to 4.69%. And that would increase the repayments by $90 a month to $3,131.
Of course, every borrower's situation looks different, and most borrowers will be on higher rates than the example given. But almost every borrower's rate is going to increase off the back of this news (unless you fixed your rate).
What should borrowers do now?
- Watch and wait. Most lenders won't raise rates today. Some will take days or weeks to pass on today's rate rise. Your lender will notify you of your rate change.
- Re-examine your budget. You know your rate is probably going to rise, so use a repayment calculator to see how much the higher rate will impact you. Then look at your monthly income and expenses to see if there are ways you can cut back.
- Compare rates. Even though every variable rate loan is going to increase off the back of today's news, it's still a good idea to compare rates widely. This helps you get a good sense of what a low interest rate really looks like.
- Check your lender's website too. You might be surprised to find your lender actually has a lower rate home loan for new borrowers, even if it has you on a higher rate. Call your lender and ask it to give you the same rate. I did this just last week and it only took a few minutes.
- If you're still not happy, refinance. If you think your lender can't give you a good enough deal and you find something better, switch. Refinancing your home loan takes a few hours' work but the savings are well worth it.
Compare the latest home loan rates and find a better deal. Need help asking your lender for a lower rate? Use our home loan negotiating scripts to make it easier.
