RBA Rates Announcement March 2023

07.03.23 | Michael Brown | News

The RBA today upped the cash rate to 3.60%, putting even more financial stress on many households in the Harbour City.

A tenth consecutive rise was confirmed by the RBA today as it looks to bring down a high inflation rate by ramping up the cost of borrowing money.

And when banks and lenders follow suit – a certainty – it means more pain for those Sydneysiders on variable home loan rates.

However, the under-fire Central Bank of Australia is sticking to its policy despite the hardship it’s causing many in Sydney.

‘Global inflation remains very high. In headline terms it is moderating, although services price inflation remains elevated in many economies.

‘It will be some time before inflation is back to target rates,’ said the RBA today, adding it’s not expecting the inflation rate to get back down to the 2–3% target band till mid-2025, though they are forecasting inflation to ‘decline this year and next.’

Predictions aside, Australia’s Central Bank has now delivered a lightning-fast series of monthly increases in the rate from its historic low in April 2022 of 0.1%.

What’s more, with banks and lenders passing on these increases, home loan borrowers in Sydney are having to tighten their belts even more (some borrowers are paying over $1000 more a month since the first rise in May last year).

Amid the backdrop of a review into how Governor Lowe and the board operate monetary policy, there is increasing worry that these rate rises will lead to a recession. Let’s face it, many households are already doing it tough (noisy protestors outside the RBA’s Martin Place offices made their point very clear recently).

As the Central Bank said last month, the window for a ‘soft landing’ remains a narrow one. Which is a neat way of preparing Australians for the worst.

Not only are variable rates spiking but a large number of Australians are moving off fixed rate mortgages in the third quarter of this year. An estimated $275 billion worth of fixed-rate loans with the big four banks will come to an end between July and December this year.

This means rates could shoot up dramatically overnight for a significant number of Sydneysiders who took a fixed rate home loan when rates were low, believing rates might only rise in 2024 (which was the RBA’s messaging).

‘The Board recognises that monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments,’ added the RBA today.

‘Some households have substantial savings buffers, but others are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living.’

If rate rises have you concerned, contact Mortgage Broker Sydney.

Our friendly brokers can meet you wherever is most convenient: your home, office or local cafe. We’re flexible.

We can also help with tips on how to uncover lower rates, boost your savings, consolidate other debts and take the pressure off increases in household prices.