The Reserve Bank of Australia (RBA) has today hiked the official interest rate by 0.50 per cent to 2.35 per cent.
This was the fifth consecutive hike in as many months, with borrowers now waiting for the banks to pass on the rise.
Today’s hike brings the cash rate to its highest point since 2014.
RBA governor Philip Lowe said the central bank was determined to get inflation back under control.
“The Board is committed to returning inflation to the 2–3 per cent range over time,” Lowe said.
“It is seeking to do this while keeping the economy on an even keel.
“The path to achieving this balance is a narrow one and clouded in uncertainty, not least because of global developments.”
Lowe said the global factors influencing the Australian economy were mostly due to issues with Russia and China.
“The outlook for global economic growth has deteriorated due to pressures on real incomes from high inflation, the tightening of monetary policy in most countries, Russia's invasion of Ukraine, and the COVID containment measures and other policy challenges in China,” he said.
Lowe said the central bank is predicting the cost of living will continue to rise, reaching its peak at the end of this year.
“The Bank's central forecast is for CPI inflation to be around 7¾ per cent over 2022, a little above 4 per cent over 2023 and around 3 per cent over 2024,” he said.
“The further increase in interest rates today will help bring inflation back to target and create a more sustainable balance of demand and supply in the Australian economy.”
How much will mortgage repayments rise?
According to data from RateCity.com.au, for an owner-occupier with a $500,000 debt at the start of the hikes and 25 years remaining on their loan, the total increase to their monthly repayments could be $614.
For the same borrower with $750,000 remaining on their loan, repayments could have risen $922 since May.
And finally for someone with $1 million left on their loan, repayment could have risen $1,229 a month since May.
Increase in repayments (Sept)