Interest rates just rose by 0.25%. What does it mean for your mortgage?
That’s right, cue Tal Bachman, because the cash rate is so “highhhhhh, high above…all our expectations.”
After a break in January, the RBA is back with another cash rate rise for the eighth month in a row, this time by 0.25% to 3.35%.
BRB deleting all the items in my ASOS cart because it looks like inflation isn’t ready to slow down just yet.
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).
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:
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