Al-anwar Newspaper English news in Australia
Australian homeowners have been hit with another knock to their repayment efforts with the Reserve Bank of Australia announcing a fresh interest rate hike.
The shift is a 0.25 per cent rise and takes the cash rate to 2.6 per cent, the highest level since 2013.
It is also the sixth consecutive hike since May 2022.
The RBA has continued its fast pace of rate hikes in order to ensure inflation expectations remain anchored around its two to three per cent target.
Graham Cooke, head of consumer research at Finder, said Aussies with a $500,000 mortgage will now be paying almost $9,000 more a year in interest compared to just six months ago.
“Australians with a $500,000 mortgage will be forking out $735 more per month compared to what they were paying in April,” he said.
“That’s a whopping amount of extra money to pay every month – especially when everyday items like groceries and petrol are skyrocketing in price.
The average monthly repayment is $2,966 a month and $35,592 a year, with the latter figure up $8820 in the past six months.
Governor of the Reserve Bank of Australia, Phillip Lowe, said fluctuating levels of inflation for at least the next year will bring new challenges.
“A further increase in inflation is expected over the months ahead, before inflation then declines back towards the 2–3 per cent range,” he said.
“The expected moderation in inflation next year reflects the ongoing resolution of global supply-side problems, recent declines in some commodity prices and the impact of rising interest rates.
“Medium-term inflation expectations remain well anchored, and it is important that this remains the case. The Bank’s central forecast is for CPI inflation to be around 7¾ per cent over 2022, a little above 4 per cent over 2023 and around 3 per cent over 2024.”
Rates have not risen with such speed since 1994 when the cash rate soared from 4.75 to 7.5 per cent in just five months.
Chief Economist at CreditorWatch, Anneke Thompson, said the hike comes amid unstable financial circumstances across the world.
“Global factors have played a key role in today’s decision by the RBA, as inflation continues to remain sticky in the US, and currency movements make inflation harder to tame in Australia,” Ms Thompson said.
“The US Federal Reserve hiked their interest rates another 75 basis points in September, and indicated they won’t stop until inflation is well under control there.”
Ms Thompson went on to note Australia’s unpredictable job market was having an impact on general economic stability.
“There are now 10,000 fewer jobs available in Australia than three months ago. This is a forward indicator for unemployment, and coupled with increasing labour supply through migration, we may have already witnessed our trough in the unemployment rate,” she said.
“Given strong employment has been such a key driver of consumers’ willingness to spend, the RBA will be watching this data closely.
