Another RBA Interest Rate Rise - How This Impacts You
The Reserve Bank of Australia (RBA) has raised the interest rate by 0.25%, to a cash rate of 4.35%. Here is some information about what this means.
What does this interest rate mean?
Basically, the rise means that it will be more expensive to borrow money from a bank. This translates to higher interest rates for mortgages in Australia. This may sound scary, but it aims to combat inflation by reducing spending to slow down our economy.
How this will affect your mortgage
When you apply for a mortgage, the bank will assess your ability to make repayments based on a higher interest rate, to account for any changes which may occur during the term of your loan. An increase in the cash rate by the RBA together with the current rate of inflation means that many of us will need to make adjustments to our household budgets to accommodate the changes.
How could this affect your monthly repayments?
We’ve crunched the numbers at Barwon Mortgages to give you an idea of how you may be impacted. The rate rise will add around $76 a month to repayments on a $500,000 home loan.
“Now is the time to reach out to your bank to check if you have the best rate. If you need some assistance with checking your rate and perhaps negotiating a better deal, please contact Barwon Mortgages to arrange a free consultation. ”
Your options for managing rate increases
If you are worried about interest rate rises, you should ensure that you have a buffer in your budget to manage any increases. You could also consider locking in your mortgage at current rates. If you are eligible to refinance your mortgage and find a lower rate, this may also be the time to do so.
The Barwon Mortgages team is available to help you with this, and our service is free.