The Reserve Bank of Australia (RBA) increased the cash rate by half a percentage point today, taking it even higher, to 1.85%.
How Does The Cash Rate Increase Affect My Interest Rate?
Lenders add a margin to the official cash rate to determine the variable interest rate they lend to customers. So if you have a variable interest rate, it will almost certainly go up with the cash rate increase.
How Much Is My Monthly Repayment Going to Increase?
The following chart shows how much the extra half a percentage point in interest will cost homeowners, based on the size of their loan. (These example loan repayments were determined using our repayment calculator, based on the lowest variable rate we can offer over a 30-year term, as of 2 August 2022. Rates are subject to change from this date.)
Loan Amount
Before Increase (2.99%)
After Increase (3.49%)
Difference
$500,000
$2,105
$2,242
$137
$600,000
$2,526
$2,691
$165
$700,000
$2,947
$3,139
$192
$800,000
$3,369
$3,588
$219
$900,000
$3,790
$4,036
$246
$1 million
$4,211
$4,485
$274
What To Do Now
Home Loan Experts CEO Alan Hemmings noted that understanding how your interest rate compares is important. A difference of just 15 basis points in interest rates could mean $60 a month in home loan repayments.
He further remarked, “Properties are staying on the market longer because buyers are worried about where interest rates may finish and do not want to overextend themselves. If this trend continues, it may be an opportunity for buyers, whether first-home buyers, upgraders or investors, to find a suitable property.”
While it’s difficult to pinpoint how much interest rates will rise in the coming months, it is important to lessen your financial burden when it does.
We’ve outlined some tips to prepare for a rate rise. We can guide you through the right steps to prepare you for an interest-rate rise, whether through refinancing or simply managing your home loan more effectively.
Our mortgage brokers know how to get you the best deal as interest rates rise. We can help you refinance to keep your home loan’s interest rate competitive. Call 1300 889 743 or enquire online to speak to one of our expert brokers today!
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About the Author
Otto Dargan
Otto Dargan is the Founder of Home Loan Experts. He is involved in strategic and operational matters. He utilises his time in seeking...
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