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The Reserve Bank of Australia (RBA) has driven the cash rate up by another 25 basis points to 3.10%. Find out how much this final cash rate hike of the year has increased your mortgage repayments in 2022, and what you can expect in 2023.
The good news? This is it. You can head into the summer holidays knowing this is the last rate rise until at least February when the RBA board will meet again (thankfully they take January off!).
The cash rate now sits at 3.10% following eight months of consecutive rate hikes.
RBA Governor Philip Lowe said in a statement the RBA board expects to increase interest rates further over the period ahead, but it is not on a pre-set course.
“Inflation in Australia is too high, at 6.9% over the year to October,” said Governor Lowe.
“There has been a substantial cumulative increase in interest rates since May. This has been necessary to ensure that the current period of high inflation is only temporary.
“High inflation damages our economy and makes life more difficult for people.”
So how much have your mortgage repayments gone up in 2022?
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $835 a month on your mortgage compared to May 1.
If you have a $750,000 loan, repayments will likely increase by about $110 a month, up $1250 from May 1.
Meanwhile, a $1 million loan will increase almost $150 a month, up about $1,680 from May 1.
How high are interest rates expected to go in 2023?
Here’s what economists from the big four banks are predicting in 2023:
CommBank – no increases in 2023. Dropping to 2.60% by December 2023
NAB – rising to 3.60% by May 2023 and then staying steady
Westpac – rising to 3.85% by May 2023, then dropping to 2.85% by November 2024
ANZ – rising to 3.85% by May 2023, then dropping to 3.50% by November 2024
If you’re starting to feel the pinch and are worried about what interest rate rises might mean for your budget in 2023, feel free to contact us today.
Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So don’t spend the holiday season sweating on next year’s mortgage repayments – get in touch now so we can work out a plan together.
