We're breaking free from low interest rates and they're gonna keep movin' up.
๐ Background: The Reserve Bank of Australia makes a call on the official cash rate on the first Tuesday of every month.
๐ What happened: We've had a record -ow cash rate of 0.1% since November 2020, and we haven't seen a cash rate increase since November 2010. AKA back when Prince William announced his engagement to Kate Middleton!
๐ What else: Now, the RBA has raised the official cash rate by 25 basis points to 0.35%. AND the RBA said rates could rise from to around 2% by the end of the year.
๐ก Hiking the official cash rate impacts everyone - whether you're a homeowner or not. If the RBA increases the cash rate, then the interest rate on all loans (with a variable rate) will likely increase too (i.e. home loans, car loans etc.).
๐ก For a $500k variable home loan, monthly repayments will increase around $68. But it's not all bad. In theory interest on your savings accounts should also rise.
๐ก However, the banks don't always increase their savings rate quickly... or at all. They aren't forced to increase their rates, so many of them don't. Or, they do but a teensy, tiny bit. Keep tabs on it Flux fam, this could be just the beginning!
Sign up for Flux and join 100,000 members of the Flux family