The Reserve Bank increased the official interest rate by 0.25% yesterday taking it to 2.60%.
While this rate rise is lower than what many economists forecast, the Reserve Bank indicated in their press release that it’s probably not the last.
“The Board is committed to returning inflation to the 2–3 per cent range over time. Today’s increase in interest rates will help achieve this goal and further increases are likely to be required over the period ahead.”1
It is important for borrowers to be aware of what their repayments will be if rates continue to rise. Make necessary changes to your household spending now so that you can afford future increases in your loan repayments.
We’ve done some number crunching to provide a general guide for repayment levels for various loan sizes at various variable interest rates. See the table below.
You can also use the loan repayment calculator on the CFS website to run scenarios on what your loan repayments will be at various variable rates.
If you are feeling overwhelmed about the impact the interest rate rises may have on your household budget, please contact us to discuss your options.
Monthly repayment levels at various standard variable interest rates
(Assumptions: owner occupied, principal and interest loan with a 30-year loan term, monthly loan repayment. Note individual loan contracts will vary.)
Loan size | Monthly Repayments at increasing variable rates
|
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3.5% | 4% | 4.5% | 5% | 5.5% | 6% | 6.5% | 7% | ||
$500000 | $2246 | $2388 | $2534 | $2685 | $2839 | $2998 | $3161 | $3327 | |
$600000 | $2695 | $2865 | $3041 | $3221 | $3407 | $3598 | $3793 | $3992 | |
$700000 | $3144 | $3342 | $3547 | $3758 | $3975 | $4197 | $4425 | $4658 | |
$800000 | $3593 | $3820 | $4054 | $4295 | $4543 | $4797 | $5057 | $5323 | |
$900000 | $4042 | $4297 | $4561 | $4832 | $5111 | $5396 | $5689 | $5988 | |
$1,000000 | $4491 | $4775 | $5067 | $5369 | $5678 | $5996 | $6321 | $6654 |
These are general examples so please do not hesitate to contact us if you would like to discuss repayments specific to your loan.
Check your loan repayments
Each lender has a different process for increasing loan repayments. For example, some lenders wait until the loan anniversary before adjusting loan repayments. Please do not hesitate to contact us if you want to clarify your lenders process for adjusting your loan repayment.
If you are currently on a fixed rate
If you are currently on a fixed rate, it is essential to consider what your loan repayments will convert to once the fixed term is over and plan for this. Talk to CFS to discuss your loan and options.
Consider increasing your repayments
If your loan structure allows it, and it is appropriate for your situation, consider increasing your repayment level to the amount required for higher interest rates than current levels. Paying extra now could help ensure you are ready for further rate increases.
Talk to us
If you would like to talk through options to help manage your repayments at higher rates contact us. We can’t stress enough the importance of planning ahead. Contact the office on 429 9775 or email: kris@courtfs.com.au
The information provided in this Interest Rate Update is general and has not taken in to account personal financial situations, objectives and needs. Individual circumstances and loan contracts will vary. We recommend seeking advice about your personal circumstances before acting on the information provided here.
For specific information about your home loan and options for your specific circumstances, please do not hesitate to contact Court Financial Services 9429 9775
- https://www.rba.gov.au/media-releases/2022/mr-22-33.html