Aussie mortgage holders have been dealt another blow today after the Reserve Bank of Australia (RBA) hiked the cash rate for a seventh month in a row.
The official cash rate is now sitting at 2.85 per cent - up from just 0.1 per cent in April.
RBA governor Philip Lowe said rising inflation in Australia was the reason behind the hike.
“A further increase in inflation is expected over the months ahead, with inflation now forecast to peak at around 8 per cent later this year,” Lowe said.
“The board has increased interest rates materially since May.
“This has been necessary to establish a more sustainable balance of demand and supply in the Australian economy to help return inflation to target.”
Lowe also warned the RBA “expects to increase interest rates further” as time goes on.
Head of consumer research at Finder Graham Cooke said Aussies with a $500,000 mortgage would be paying $815 more a month compared to just seven months ago.
“This seventh consecutive rate hike – 275 basis points in total – will be a bitter pill to swallow for many,” Cooke said.
“The current series of rate hikes has added almost $10,000 to the annual cost of a $500k mortgage.”
Cost of living set to climb even higher
Australia’s annual inflation rate (7.3 per cent) is at its highest level since June 1990, according to the most recent data form the Australian Bureau of Statistics (ABS).
This means the cost of living has ramped up big time in the past few months.
Cooke said inflation and cash rate rises were already causing stress for thousands of Aussie households.
“Finder research is showing a significant increase in the number of households indicating housing, groceries and petrol as causes of financial stress,” he said.
“According to the experts, the factors causing these price increases are likely to hang around for many months, meaning no relief on the horizon for households.”