The official cash rate in Australia has been increased by the Reserve Bank of Australia (RBA) for the 11th time in the past year, resulting in a rate of 3.85%.
Despite predictions from experts that the cash rate would remain steady for another month, this latest rate hike has been implemented.
This decision may be tough news for many households across the country.
Have you considered how much your mortgage repayments could increase following the latest rate hike?
If you have a variable home loan, it is likely that your bank will follow the RBA’s lead and raise the interest rate shortly.
For instance, suppose you are an owner-occupier with a 25-year loan of $500,000 paying principal and interest. In that case, this month’s 25 basis point hike could raise your monthly repayments by nearly $75. Compared to 3 May 2022, that is an additional $1,000 per month on your mortgage. If you have a $750,000 loan, your repayments may rise by about $115 per month, increasing by $1,600 from 3 May 2022. Similarly, a $1 million loan may increase by around $150 per month, up by approximately $2,150 from 3 May 2022.
Many households across the country are undoubtedly experiencing the impact of these rate hikes, which can be concerning. If you are one of the many people with a fixed-rate home loan, you may be curious about your options once your fixed-rate period ends. We can assist you in exploring various options, such as refinancing (which may entail extending the loan term and reducing monthly payments), debt consolidation, or building up a buffer in an offset account in anticipation of further rate hikes.
So, if you are concerned about meeting your repayments or want to take a proactive approach, book a free consultation with us today.