A fifth RBA cash rate rise already? All signs point to yes
97% of experts say interest rates will rise again on Tuesday by as much as 50 basis points.
Your home loan interest rate is about to get even more expensive, if you can believe it.
The Reserve Bank of Australia (RBA) has already raised the official cash rate 4 times in 4 months. This has effectively added 175 percentage points to most Australians' home loan rates.
And now 97% of the experts in Finder's September RBA cash rate survey believe the bank will do it again when it meets on Tuesday.
64% of those experts predict the RBA will hike rates by another 50 basis points. This would bring the cash rate to 2.35%.
Finder analysis shows rising interest rates have already added over $600 a month to the average Australian's mortgage repayments. If the RBA does raise interest rates on Tuesday, it will get even more expensive.
Why are interest rates rising?
Interest rates on home loans have been at record lows in recent years thanks to pandemic support policies and low interest rate benchmarks set by central banks in Australia and other parts of the world.
But increased demand and a range of supply issues – from shutdowns in China to war in Ukraine, environmental disasters and rising energy costs – have sent inflation soaring.
When things get expensive, central banks can raise interest rates. This makes borrowing money more expensive. And while that drives up the ordinary person's cost of living, it should, in theory, reduce consumer demand and drive down prices.
The RBA has increased the cash rate with incredible speed because inflation is so high.
Calculate how a rate rise might affect your loan repayments
3 tips to beat rising interest rates
Here are some tips if you're getting hit hard by soaring inflation and rising interest rates:
- Get a better deal on your home loan. Ask your lender for a lower rate (they might be offering a better deal for new customers). Consider switching to a new lender with a better offer. You could offset some of the higher rate costs this way.
- Take advantage of rising savings rates. As home loan rates rise, savings account rates rise too. A few accounts now offer rates of 3.00% or higher. It's a small silver lining but it helps.
- Track your spending and review your budget. Prices have risen, so it's worth taking another look at your spending and finding areas where you can cut back. Download the Finder app to keep track of your money all in 1 place.
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