- Find out who has moved at RateCity’s RBA rate tracker
The RBA has today hiked official rates for the first time in 11.5 years by 0.25 percentage points, taking the cash rate to 0.35 per cent.
If the banks pass on this hike in full, the average borrower with a $500,000 loan and 25 years remaining will see their repayments rise by $65 a month. Someone with a $1 million loan will see their repayments rise by $130.
Impact of today’s 0.25% cash rate hike if banks pass it on in full
Calculations are for existing customers and based over 25 years
|Current loan size||Old rate||New rate||Increase to repayments|
Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining. Rate is the RBA average existing owner-occupier variable rate of 2.92% and assumes banks pass the cash rate hike on in full.
Already, low-rate lender Homestar Finance has announced it will keep its lowest variable rate loan at 1.79 per cent. However, this rate is only for new customers.
The cash rate will keep moving in the coming months. In today’s statement, Governor Lowe said that further hikes will be required to bring inflation back into the target band.
Borrowers must brace themselves for further rate pain. Westpac was previously predicting the cash rate could rise to 2 per cent by May 2023.
If this happens, the average borrower with a $500,000 debt could see their repayments rise in total by $511 by May 2023.
RateCity.com.au research director, Sally Tindall, said: “Today’s hike marks the end of an era for Australia’s cash rate.”
“At 0.35 per cent the cash rate is still historically incredibly low, but there are plenty more hikes around the corner,” she said.
“Money is going to start to get more expensive to borrow, and quickly
“We expect the majority of banks will pass on today’s hike to borrowers in full, however, some lenders may opt to keep some of their lowest rates on the table for new customers.
“Homestar Finance has already announced it’s keeping its 1.79 per cent variable rate on the table, despite the hike to the cash rate, although at this stage, it’s only available to new customers.
“If you’re on a variable mortgage rate, find out what your bank intends to do but more importantly, check it against the competition.
“Right now, there’s a 1.13 percentage point gap between the average existing variable rate and the lowest rate.
“If you can get a full percentage point off your rate now, you could protect yourself against the next four cash rate hikes,” she said.
- Find out which banks have moved and by how much at RateCity’s RBA rate tracker.