labelCategory: RBA Cash Rate
The Reserve Bank of Australia (RBA) increased the cash rate by 25 basis points today, taking it to 2.85%.
How Does The Cash Rate Increase Affect My Interest Rate?
Lenders add a margin to the official cash rate to determine the variable interest rate they lend to customers. So if you have a variable interest rate, it will almost certainly go up with the cash rate increase.
How Much Is My Monthly Repayment Going to Increase?
The following chart shows how much the extra half a percentage point in interest will cost homeowners, based on the size of their loan. (These example loan repayments were determined using our repayment calculator, based on the lowest variable rate we can offer over a 30-year term, as of 1 November 2022. Rates are subject to change from this date.)
|Loan Amount||Before Increase (4.11%)||After Increase (4.36%)||Difference|
What Happens To Your Interest Rate Now?
Addressing the recent rate rise, Home Loan Experts CEO Alan Hemmings said, “All lenders have been passing on the interest rate increases to customers. But we continue to see that the rates offered to new customers are lower. Data from the Reserve Bank and APRA shows the difference is nearly half a percentage point between what new and existing customers pay in interest for an owner-occupier home loan.
“On a $500,000 loan, that translates into a difference in repayments of $140 a month. As always, it pays to check your interest rate and speak to a broker about the rates available in the market.”
He also said potential buyers need to be aware of potential changes in their borrowing power. “For those customers looking to buy in this market, it is important to continue to talk to your brokers,” Hemmings said. “Considering this is the seventh straight month of cash rate increases, the amount a customer can borrow will have changed. Even if a client is pre-approved, the lender may recalculate borrowing limits once a property is found.”
Our mortgage brokers know how to get you the best deal as interest rates rise. We can help you refinance to keep your home loan’s interest rate competitive. Call 1300 889 743 or enquire online to speak to one of our expert brokers today!