A rate rise, or interst rate rise, is when a financial institution increases their interest rates on their financial products such as home loans, savings accounts and credit cards. A rate rise usually occurs after the Reserve Bank of Australia lifts the official cash rate, which is the benchmark used by lenders to determine the rate when borrowing between financial institutions. The Reserve Bank of Australia meets on the first Tuesday of each month and publishes their decision at approximately 2.30pm that day.
The average rate rise is 25 basis points (0.25%) however they have been know to raise the cash rate by 50 basis points (0.50%). A rate rise helps maintain economic inflation for example, when interest rates increase the value of the real estate market generally drops or steadies. A rate rise is not necessarily a bad thing.
Even if there are no rate rises you should always understand what rates your financical products are on. You can compare home loans, and compare savings accounts in Australia on RateCity.com.au. You can also use our Australian mortgage calculator to understand how much you might be paying off under different interest rates as well.
Please feel free to read through our home loan guide to find out more about home loans.