Reserve Bank of Australia raises interest rates for fourth straight month

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The Reserve Bank of Australia has raised interest rates for the fourth consecutive month, raising the country’s target for the spot interest rate by 50 basis points to 1.85 percent.

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Today’s rise marks the first time since the introduction of inflation targets in 1990 that the central bank has raised the spot interest rate for four months in a row.

For the average borrower with a $500,000 loan and 25 years to go, this afternoon’s hike will result in an increase of $140 per month — or $472 since the RBA began raising rates in May 2022.

It is the first time since the introduction of an inflation target in 1990 that the RBA has raised rates for a fourth consecutive month. (Image: Tara Blancato)
Are you having trouble paying off due to the recent interest rate hikes? We want to hear your story. Contact reporter Stuart Marsh at [email protected].

For those with larger loans, the repayment jumps are equally strong.

A person with a $750,000 loan now faces a monthly increase of $211 (an increase of $708 a month since May), while those with a $1 million loan face a monthly increase of $281 (or an eye-watering increase of $944 per month since May).

Today’s rise was widely expected by financial markets, which are currently pricing the RBA to continue raising rates until they reach 3 percent, or until inflation begins to fall – whichever comes first.

In his monetary policy statement, RBA Governor Philip Lowe said the bank is keeping a close eye on the real estate market, where prices have fallen rapidly since rate hikes began in May.

“An important source of uncertainty remains the behavior of household spending. Higher inflation and higher interest rates are putting pressure on household budgets. Consumer confidence has also fallen and house prices are falling in some markets after the large increases in recent years.” he said.

“By working the other way, people find work and get more hours of work. Many households have also built up large financial buffers and the savings rate remains higher than before the pandemic.

“The council will closely monitor how these various factors balance in assessing the appropriate determination of monetary policy.”

Graham Cooke, head of consumer research at Finder, said today’s surge will be “painful” for borrowers whose budgets are already strained by the rising cost of living.

“Rising interest rates, rising inflation, energy prices and the general cost of living are already weighing on household budgets,” he said.

“This latest increase could cost the average mortgagee as much as $7,300 extra per year compared to what they paid in April.

“With nearly a quarter of Australian homeowners already struggling to pay their mortgage in July, this news will be particularly painful.”

Mortgage borrowers face increases in monthly repayments as their cost of living is eroded by rising food and gas costs. (Delivered)

It seems that borrowers should expect much of the same in the coming months.

Anneke Thompson, chief economist at CreditorWatch, said the extraordinary economic conditions in Australia are fueling inflation, which the RBA will try to tame with more rate hikes.

“The Reserve Bank of Australia (RBA) has again decided to raise its target for the spot interest rate. This is the fourth month in a row, pointing to the level of concern that inflation is causing. Contributing to the decision were July’s employment data, which saw the unemployment rate drop to 3.5 percent. There are now 600,000 more Australians in work than in March 2020 – an extraordinary increase,” explains Thompson.

“The economic update provided by the treasurer last week indicated that inflation peaked at nearly 8 percent towards the end of the year before starting to decline in 2023.

“While this is clearly a concern, the RBA will no doubt be focused on trying to break supply-side inflation versus demand-side inflation, and align their monetary policy response as closely as possible.”

During Question Time, Treasurer Jim Chalmers said that while the RBA’s rate hike is not surprising, it will “sting” Australians.

“Australians knew this was coming, but it won’t make it any easier for them to deal with,” he said.

“This cycle of rate hikes started before the election in response to inflationary pressures that started to accelerate early this year.

“Average homeowners with an outstanding balance of $330,000 today will have to find about $90 more per month in repayments as a result of this decision, on top of about an additional $220 in repayments since early May.

“For Australians with a $500,000 mortgage, it’s about $140 extra per month, on top of the extra $335 they’ve had to find since early May.

“As I said, Mr Chairman, this decision comes as no surprise. It won’t come as a shock to anyone, but it will still hurt.’

Increase in mortgage interest deduction by 0.50 percent increase

loan size:

Increase per month:

Increase since May 2022:







$1 million



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