min read
· Posted on
February 21, 2024

Interest rates December 2022: The RBA has decided to grinch haaard this Christmas with another rate rise

The RBA strikes again, raising interest rates for the seventh month in a row from 2.85% to 3.10%!

What's the key learning?

  • The Reserve Bank of Australia (RBA) just raised the official cash rate by 0.25% to 3.10%
  • Generally when the RBA increases the official cash rate, banks and lenders increase their home loan interest rates

RBA you’ve done it again! The Reserve Bank’s December decision is in and for the seventh consecutive month, the cash rate has risen, this time by 0.25% to 3.10%. 

At this point even pressing send on a risky text isn’t as stressful as the first Tuesday of each month.

Now, it doesn’t come as much of a surprise but…ouch, seven months in a row! This is gearing up to be one expensive holiday season. 

Luckily, the RBA takes some time off in January, meaning there will be no cash rate announcement next month. 

Phew! We all need a break from these rises too. 

So, what happens when interest rates rise?

When the RBA increases the cash rate, the banks will almost always follow suit and raise the interest rate on your loan. 

Experts say it takes around two or three months for individuals to feel the full impact of a rate rise on their cash flow… so the impact of these successive rises won’t be felt until the new year. 

And your interest rate on your savings account should increase too (but often doesn’t increase to the same extent).

How will the cash rate hike impact my home loan?

Here’s a breakdown of how rate rises could impact your home loan if you’ve got a variable rate:

Source: MoneySmart. Based on owner occupier loans of $500,000, $750,000 and $1,000,000 over 25 years.

Why does it feel like rates are so much higher than usual?

You’re not imagining it, they are! But it probably feels even higher because as recently as this May, interest rates were at a historic low of 0.1%.

Here’s a recap of the rises this year:

  • May four: 0.35%
  • June eight: 0.85%
  • July six: 1.35%
  • August three: 1.85%
  • September six: 2.35%
  • October four: 2.60%
  • November one: 2.85%
  • December six: 3.10%
  • February seven: TBC

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