Yahoo Finance RBA holds interest rates: ‘Breathe a sigh of relief’
Aussies are finally being given some reprieve after the RBA kept the cash rate on hold after 10 consecutive hikes.
The Reserve Bank of Australia (RBA) has kept the official cash rate on hold at 3.6 per cent in April, giving homeowners some much-needed relief.
RBA governor Philip Lowe said it decided to leave rates on hold to assess the full impact of the previous hikes.
“The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt. The Board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook,” Lowe said.
Also read: Big banks’ surprise interest rate calls: ‘Last thing the RBA wants’
Also read: RBA interest rate hikes could be over: Here’s why
Also read: RBA’s Lowe warns interest rates ‘have not peaked’
However, Lowe warned that just because rates are on hold this month, that doesn’t mean further hikes were out of the picture.
“The Board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target,” he said.
“The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty.”
Finder head of consumer research Graham Cooke said the decision was anyone’s guess this month.
“Homeowners deserve a break from the relentless increase in pressure, and can finally breathe a sigh of relief,” Cooke said.
More than a third (36 per cent) of Aussie homeowners said they struggled to pay their mortgage in March, according to Finder’s Consumer Sentiment Tracker.
However, it’s unlikely this will be the end of interest rate increases. Experts who weighed in on Finder’s RBA survey predicted the official interest rate would go as high as 4 per cent.
If the cash rate were to peak at 4 per cent, that would mean $15,000 more in interest on the average home loan of $600,000.
Average Aussie mortgage repayments
Month | Cash rate | Average home loan rate | Average monthly repayment | Average monthly increase | Average annual repayment | Average annual increase |
April 2022 | 0.10% | 3.45% | $2,697 | - | $32,364 | - |
April 2023 | 3.60% | 6.47% | $3,788 | $1,091 | $45,456 | $13,092 |
4% (predicted peak) | 4% | 6.87% | $3,948 | $1,251 | $47,376 | $15,012 |
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to our free daily newsletter.
