RBA Raises Rates Again
By Zeee Media
Their total increase to date from the May, June and July rate hikes would be $333 per month.
For a borrower with a $1 million mortgage, today’s decision will add $273 to their monthly repayments, bringing their total increase to $665 per month since April.
RBA raises cash rate by another 50 basis points to 1.35 per cent
The Reserve Bank has raised interest rates for the third month in a row, with another massive hike set to cause more pain for borrowers.
The Reserve Bank has raised interest rates for the third month in a row, with another massive hike set to add hundreds of dollars to monthly mortgage repayments for the average borrower.
After its July meeting this afternoon, the RBA announced another 50 basis point increase, in line with market expectations, bringing the official cash rate target to 1.35 per cent.
The third back-to-back rise follows another shock 50 basis points in June – the largest increase since February 2002 – and 25 basis points in May.
May’s increase was the first since 2010, as the central bank lifted the cash rate from its record low emergency level of 0.1 per cent to combat soaring inflation.
“Today’s increase in interest rates is a further step in the withdrawal of the extraordinary monetary support that was put in place to help insure the Australian economy against the worst possible effects of the pandemic,” RBA governor Philip Lowe said in his statement.
“The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed. The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”
At its meeting today, the Board decided to increase the cash rate target by 50 basis points to 1.35 per cent. It also increased the interest rate on Exchange Settlement balances by 50 basis points to 1.25 per cent – https://t.co/QwoeT6U8OD
— RBA (@RBAInfo) July 5, 2022
For a typical owner-occupier with a $500,000 mortgage and 25 years remaining, today’s increase will see their monthly repayments rise by $137, according to RateCity.
Their total increase to date from the May, June and July rate hikes would be $333 per month.
For a borrower with a $1 million mortgage, today’s decision will add $273 to their monthly repayments, bringing their total increase to $665 per month since April.
“Australians are potentially staring down the barrel of the steepest RBA hikes since 1994,” said RateCity research director Sally Tindall.
“Variable rate borrowers should prepare for another 0.50 percentage point hike this month and potentially another double hike in August. This would be a bold move by the Reserve Bank but not at odds with action other central banks are taking to rein in inflation.”
Finder head of consumer research Graham Cooke said it was “tough news” for many homeowners, with one in four already struggling to meet their monthly mortgage payments in June.
“There’s no light at the end of the tunnel just yet, with our panel forecasting at least two more rate rises to come,” he said.
“This will put further downward pressure on a rapidly deflating housing market.”
CoreLogic figures showed national house prices fell for the second consecutive month in June by 0.6 per cent.
The research firm says the trajectory of the falls will be “heavily dependent” on the path interest rates take.
“A peak-to-trough decline of more than 10 per cent is becoming more mainstream across the various private sector forecasts,” said CoreLogic head of research Tim Lawless.
“Ten per cent decline in the market would take national housing values back to levels similar to July 2021. A 15 per cent decline would take the market back to April 2021 levels. A 20 per cent decline in home values would take the national index to January 2021 levels, and only marginally above where home values were in late 2017.”
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https://www.news.com.au/finance/economy/interest-rates/rba-tipped-to-raise-cash-rate-by-another-50-basis-points/news-story/1c46fab6bb9de8b6ce15f0c18358342d
