The Reserve Bank of Australia (RBA) has hit borrowers with a timely Melbourne Cup Day interest rate rise, choosing to lift the nation’s cash rate target by 25 basis points.
After four months of stability at 4.10 per cent, the central bank chose to lift the cash rate to 4.35 per cent in a bid to tackle enduringly persistent levels of inflation.
It is the latest in a steep string of hikes that have taken the cash rate from a record low 0.1 per cent at the start of May 2022 to the highest level since November 2011.
For the average Australian borrower with a $500,000 mortgage, today’s rise means many will be forking out an additional $76 per month, and an extra $1210 since rates began rising in May 2022.
Borrowers with larger loans – such as $1 million – are now having to find an additional $2420 every month than they were 18 months ago.
In what marks her first increase to the cash rate as RBA governor, Michele Bullock said the bank must do what it can to bring inflation down in a timely manner.
Graham Cooke, head of consumer research at Finder, called today’s hike a “tough pill to swallow” for many households whose budgets were already stretched to the limit.
“Mortgage holders are already on the ropes, the last thing they wanted was another slug from the RBA,” he said.
“Aussie’s with a $590,000 mortgage will now be forking out roughly $1,345 more per month than they were in April last year.
“That’s a huge amount of extra money to be spending on your mortgage, especially when the cost of almost everything else is also going up.”
