The RBA today lifted the official cash rate to 4.35% as the cost of borrowing rises once again for Sydney home mortgage holders.
After a period of relative stability, the Central Bank turfed its rate pauses and took action today by delivering a 0.25% hike.
The adjustment occurred as Sydneysiders were celebrating Melbourne Cup day (albeit at Randwick), adding a sombre tone to the festivities, especially for home mortgage holders.
‘The Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe,’ said the RBA today.
That timeframe is late 2025, but inflation simply won’t go down Without A Fight, conceded the RBA.
‘Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago,’ explained the Central Bank.
Martin Place’s decision today aligns with its assessment, stated last month, that ‘further tightening of policy may be necessary in the event that inflation persists beyond initial expectations.’
This tallies with the consumer price index registering a 1.2% increase in July–September, surpassing the 0.8% growth in the preceding quarter. This exceeded economists’ expectations.
The main price rises during that quarter were automotive fuel (7.2%), electricity (4.2%), rents (2.2%), and new dwelling purchases by owner-occupiers (1.3%), according to ABS data.
So, how much will this rate increase cost Sydneysiders?
Borrowers can now expect an additional $76 per month for every $500,000 borrowed for their home mortgage, according to expert data.
For some in the Harbour City, this means that home mortgage rates have shot up over $2000 more per month since rate hikes began in May 2022.
Interestingly, ANZ is predicting that the RBA’s next cut to the cash rate may not occur for another year, kicking off a rate reduction cycle that could end in May 2025.
In fact, the International Monetary Fund, in its recent report, believes further interest rate increases are required to help bring inflation down to the RBA’s target range of 2-3% by late 2025.
The Central Bank added today that ‘to date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.
‘There are still significant uncertainties around the outlook,’ it added. ‘Services price inflation has been surprisingly persistent overseas and the same could occur in Australia. There are uncertainties regarding the lags in the effect of monetary policy.’
If rates 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.
Contact us today to find solutions tailored to your needs.
Marc is a Mortgage Broker based in Melbourne with nearly two decades of experience. In his 18 years mortgage broking he has helped arrange too many loans to count but he still loves his work because he loves saving people time, effort, and money.