Aussie borrowers have been hit with another interest rate hike from the Reserve Bank of Australia (RBA) today.
The central bank hiked rates another 0.25 per cent to bring the official interest rate to 3.10 per cent - the highest rate in over a decade.
RBA governor Philip Lowe said the decision was made to raise the cash rate because inflation in Australia remains too high.
Also read: RBA told to ‘keep hiking’ interest rates
“Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role,” Lowe said.
“Returning inflation to target requires a more sustainable balance between demand and supply.”
Lowe said the cost of living was expected to continue to grow, hitting 8 per cent before dropping next year.
In more bad news for mortgage holders, Lowe said interest rates are expected to continue rising next year.
“The Board expects to increase interest rates further over the period ahead, but it is not on a pre-set course,” he said.
Finder head of consumer research Graham Cooke said the RBA’s final cash rate decision for 2022 may not have been the festive news homeowners were hoping for.
“This eighth rate hike since May means that the average home loan rate has jumped from the mid 3s to the mid 6s,” Cooke said.
“Put another way, Aussies with a $500,000 mortgage will be paying almost $900 more per month compared to what they were paying in April.
“To comfortably afford this, you’d need to be earning a minimum income of just over $180,000 – significantly more than the average salary.”
How much mortgage repayments will rise
Assuming all lenders will pass on the hikes - which is highly expected - some Aussies will be forking out thousands more each month than they were at the start of the year.
According to data from RateCity.com.au, a borrower with $500,000 left on their loan on the average variable rate with 25 years remaining will see payments increase $75 per month - up $834 since May.
That same person with $750 remaining on their loan will be paying $113 more per month - up $1,251 since before rates started rising.
Someone with $1 million left on their loan will see repayments rise $151 per month - up $1,668 per month.
Finally, someone whose loan is $1.5 million will see monthly repayments rise $226 - up $2,501 since May.