The Reserve Bank met at their June meeting and increased the cash rate by 0.5%, the largest increase in 22 years.
The Reserve Bank of Australia (RBA) announcement of the increase also comes with the warning that “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…” A clear sign to home loan borrowers that this not the last of the increases.
The RBA increase comes for the second time in as many months, with variable rate home loan borrowers likely to be hit with another increase to their monthly repayments, as banks are expected to follow suit and raise their own interest rates. The hike is the biggest single increase since February 2000, when the RBA also raised the cash rate by 50 basis points.
RBA’s announcement contained a statement from governor Philip Lowe:
“Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago. As the global supply-side problems are resolved and commodity prices stabilise, even if at a high level, inflation is expected to moderate. Today’s increase in interest rates will assist with the return of inflation to target over time.”
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 $113 per month to your repayments. Monthly repayments on a $450,000 home loan balance (25 years remaining) with a rate of 2.24% are $1,961, increasing rate to 2.49%, the payments will be $2,074.
You can try our our online comparison calculator to see how much the increase adds to your repayments:
|AMP||0.5% increase effective 20th June|
|ANZ||0.5% increase effective 17th June|
|Australian Military Bank||0.5% increase effective 23rd June|
|Bank of China||Pending|
|Bank of Queensland||0.5% increase effective 14th June|
|Bankwest||0.5% increase effective 17th June|
|Commonwealth Bank||0.5% increase effective 17th June|
|Connective Advance||0.5% increase effective 10th June|
|Firstmac||0.5% increase effective 22nd June|
|ING||0.5% increase effective 15th June|
|Keystart Home Loans||0.5% increase effective 17th June|
|La Trobe Financial||Pending|
|Macquarie Bank||0.5% increase effective 17th June|
|ME Bank||0.5% increase effective 18th June|
|MyState Bank||0.5% increase effective 20th June|
|NAB||0.5% increase effective 17th June|
|P & N Bank||0.5% increase effective 28th June|
|St George||0.5% increase effective 21st June|
|Suncorp||0.5% increase effective 14th June|
|Teachers Mutual Bank||Pending|
|Virgin Money||0.5% increase effective 21st June|
|Westpac||0.5% increase effective 21st June|
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