The Reserve Bank of Australia (RBA) met for their July meeting and made the announcement to increase the cash rate by 0.5% for the second consecutive month. The increase is the third successive as the RBA attempts to Australia’s high inflation. It’s statement cites high global inflation, the war in Ukraine and a global economy still struggling with Covid-related disruption to supply chains.
Inflation in Australia is not as high as many other countries, and the RBA concedes that much of the inflation is due to global factors, however locally there is a tight labour market, capacity constraints and the recent flooding adding pressure to prices.
The lenders are likely to pass on the full rise to their variable rates, with CBA being straight out of the blocks to announce they will be raising their variable rate by 0.5% from the 15th July.
The recent home loan rate increases are going to impact and will be felt with increases to minimum payments, but is it a natural adjustment back towards pre-Covid normality?
The recent rate increases will put the rates back to pre-Covid times. It’s worth noting that at the start of the Covid pandemic the RBA slashed rates and the government issued short term low cost facilities in the form of bonds which resulted in record low fixed rates. The cash rate in May 2019 was 1.5%, with variable rates slightly higher than they are now in the high 3s and fixed rates in a similar position. In May 2018, cash rate was at 1.5%, we were excitedly announcing a low variable rate of 3.59% in our ad.
How could today’s cash rate hike affect your mortgage?
We have included the latest updates from our lenders in the table below, we will update as we receive their notifications.
For a variable home loan of $450,000 with 25 years remaining the 0.5% increase will add an additional $116 per month to your repayments. Monthly repayments on a $450,000 home loan balance (25 years remaining) with a rate of 2.59% are $2,040 increasing rate to 3.09%, the payments will be $2,156.
You can try our our online comparison calculator to see how much the increase adds to your repayments:
Lender changes
| 86 400 (now UBank) | Pending |
| AMP | 0.5% increase effective 18th July |
| ANZ | 0.5% increase effective 15th July |
| Australian Military Bank | 0.5% increase effective 27th July |
| Bank of China | Pending |
| Bank of Queensland | 0.5% increase effective 8th July |
| Bankwest | 0.5% increase effective 15th July |
| Citi | Pending |
| Commonwealth Bank | 0.5% increase effective 15th July |
| Connective Advance | Pending |
| Connective Affinity | Pending |
| Connective Essentials | Pending |
| Connective Select | Pending |
| Connective Solutions | Pending |
| Firstmac | Pending |
| Heritage Bank | 0.5% increase effective 27th August |
| ING | 0.5% increase effective 12th July |
| Keystart Home Loans | Pending |
| La Trobe Financial | Pending |
| Macquarie Bank | 0.5% increase effective 14th July |
| ME Bank | 0.5% increase effective 9th July |
| MyState Bank | 0.5% increase effective 18th July |
| NAB | 0.5% increase effective 15th July |
| P & N Bank | 0.5% increase effective 26th July |
| RedZed | Pending |
| Resimac | Pending |
| St George | 0.5% increase effective 15th July |
| Suncorp | 0.5% increase effective 15th July |
| Teachers Mutual Bank | Pending |
| Virgin Money | 0.5% increase effective 9th July |
| Westpac | 0.5% increase effective 20th July |
Need some help?
If you’d like some assistance then we are happy to review your current position and give you some options. To get in touch you can call the office on 08 9304 9682 or email admin@foxmortgages.com.au
