This latest increase has added $114 a month to repayments on a $750,000 home loan, increasing to $1,362 a month since May last year.
Further Interest Rate Increases Ahead
According to the RBA governor, Philip Lowe, the board expects that further interest rate increases will be necessary to ensure future inflation returns to target. The board will closely monitor developments in the global economy, household spending, inflation, and the labor market.
Impact on Households
The RBA governor acknowledged that many households already struggle with rising mortgage repayments. Some households have substantial savings, but others feel the squeeze due to higher interest rates and the cost of living. He added that there is a range of potential scenarios for the Australian economy, and the path to a soft landing remains narrow.
Analysts Upgrade Peak Rates Forecasts
Mr. Lowe's post-meeting statement has prompted many analysts to upgrade their forecasts for the likely cash rate peak. Financial markets now anticipate a greater than 90% chance that the Reserve Bank will lift rates again next month.
Anxiety among Borrowers
In the Western Sydney suburb of Pendle Hill, mortgage broker Sashi Sen is witnessing a rush of clients looking to refinance their existing loans for better deals. Customers are cutting back on spending and prioritizing mortgage payments over other expenses. The Treasurer, Jim Chalmers, acknowledged that many Australians struggle with high inflation and rising interest rates.