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Borrowers hit with a 6th RBA cash rate hike: How will it affect you?

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The average borrower could see another $95 added to the mortgage repayments

As most experts predicted, the Reserve Bank of Australia (RBA) has increased the cash rate for the 6th month in a row.

Banks and lenders assess their interest rates based on the national cash rate. This means that the latest announcement from the RBA will come with an increase in interest rates for things like your home loan.

The new cash rate has gone up by 25 basis points, which means it now sits at 2.60%. In April 2022, the cash rate sat at just 0.10%.

The average Australian borrower has a $609,785 home loan. Assuming a 30-year loan term and the September average variable rate (according to the RBA's own figures) of 5.20%, your repayments would be $3,348 a month.

Adding on today's 25 basis point rate rise, you'd now be looking at a rate of 5.45%. This would change your repayments to $3,443 a month.

That's an extra $95 a month.

Calculate how a rate rise might affect your loan repayments

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Not 1, but 6 rate rises this year: What can you do?

Adding the rising interest rates on top of the cost of living crisis is likely to put a lot of people in a tough position.

If you're worried about increasing home loan rates, there are some steps you might be able to take to take the pressure off:

  1. Wait to see what your lender does. It can take a few days or even weeks to pass on the rate rise. Your lender should notify you of your change or rate.
  2. Work out a budget. If you know it's coming, prepare for higher repayments by looking at your monthly spending. See if you can identify any ways you can cut back. This should help reduce the burden of higher repayments.
  3. Ask your lender for a lower rate. Check your lender's website and see if it has a better deal for new borrowers (many do). Give them a call and see if they can offer you a better deal.
  4. Whether your lender does offer you a better rate or not, it's also a good time to look around elsewhere. Compare rates from various lenders and switch to a lower interest rate.
  5. Take advantage of rising rates. A higher home loan rate is bad news, but the rising cash rate means rising interest rates on your savings account too. There are some great high interest savings accounts for you to consider.

If rising home loan rates - or the cost of living - are putting you in serious financial hardship, the first step is to call your lender and talk through your options.

You can also call the National Debt Helpline on 1800 007 007 for free and independent advice.

And if cost of living pressures are causing you distress, you're not alone. These free resources can help:

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