At it’s monthly meeting on Tuesday 6th December, the Reserve Bank announced the 8th consecutive interest rate increase of 0.25%, taking the cash rate to 3.1%, the highest it has been in a decade.
Major lenders promptly announced they would pass the increase on to borrowers, resulting in higher loan repayments for variable rate loans; not a welcome gift for borrowers in the lead up to Christmas.
Key points to note from the Reserve Bank’s statement following their meeting on Tuesday;
- The Reserve Bank continues to makes it clear it will do what is necessary to reduce inflation to target levels. Therefore further interest rate increases are likely.
- The size and timing of future rate increases will be determined by incoming data and the boards outlook for inflation and the economy.
As the year draws to a close, there is much discussion on what the Reserve Bank’s next move will be. We know the Reserve Bank does not meet in January so as we start the new year, the official rate will remain unchanged for at least the month of January. There is widespread expectation that a rate rise is likely in February. After that, some economists suggest the Reserve Bank may pause further rate increases to give time to assess the economy. These are economist opinions that may change as economic data becomes available.
Treasurer Dr. Chalmers acknowledged that the economic effect of the the rate rises was still to be felt across the economy, but many household are already feeling the effect of higher loan repayments.
Once again, we encourage borrowers to review their household budget and consider what their repayments will be if rates do continue to rise in 2023.
The CFS team are here to assist you with any question you have regarding your loan repayments and rate rises. Please do not hesitate to contact us on 03 9429 9775.
This article was written for general information purposes only. It does not take in to account individual needs, objectives and circumstances therefore it is not intended to be advice. Individual loan contracts and circumstances vary and we recommend you talk to your mortgage broker or financial advisor before making any decisions based on this general information provided. Please do not hesitate to contact Court Financial Services if you have a question about your specific situation and loan.
