min read
· Posted on
February 21, 2024

Interest rates June 2023: RBA can’t stop, won’t stop.

Interest rates just rose by 0.25%. What does it mean for your mortgage?

What's the key learning?

The RBA said, ‘well we’re not here to f*** spiders,” and meant it. The cash rate has gone up…again!

This time, the cash rate has gone up by 0.25% - so we've gone from 3.85% to 4.10%.

All of us rn

Inflation has become the uninvited party guest, chugging all the champagne and refusing to leave. In fact, monthly CPI rose to 6.8% in the twelve months to April, which is higher than the March figure of 6.3%.

Me to inflation

The biggest contributors to April’s inflation figures were higher costs in housing (+8.9%) and food and non-alcoholic beverages (+7.9%).

So it’s as clear as a skunk at a garden party, our economy isn’t hitting the brakes just yet.

But the truth is, this wasn’t a huuuge surprise. Economists were expecting a rate hike this month, after the Fair Work Commission increased minimum and award wages last week.

And, it's no secret that the RBA isn't done yet. They're still determined to knock inflation down to their goal of 2-3%.

Okay.. but why are house prices still going up?

It's a funny one. It's fair to say nobody's bingo card had both:

  • A rise in interest rates
  • A rise in house prices

But that's what happened over the past few months. And there are a number of key reasons why.

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:

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 last May, interest rates were at a historic low of 0.1%.

Here’s a recap of the rises this year:

  • May 4th 2022: 0.35%
  • June 8th 2022: 0.85%
  • July 6th 2022: 1.35%
  • August 3rd 2022: 1.85%
  • September 6th 2022: 2.35%
  • October 4th 2022: 2.60%
  • November 1st 2022: 2.85%
  • December 6th 2022: 3.1%
  • February 7th 2023: 3.35%
  • March 7th 2023: 3.60%
  • April 4th 2023: 3.60%
  • May 2nd 2023: 3.85%
  • June 6th 2023: 4.10%

Ready to win at money?

Sign up for Flux and join 100,000 members of the Flux family

A button to App StoreGoogle Play store button
Excellent  4.9 out of 5
Star rating