min read
· Posted on
February 21, 2024

Interest rates November 2023: C’mon RBA, We Were Just Getting Comfortable

After four months off, the RBA has raised the cash rate again, this time by 0.25%. The cash rate now sits at 4.35%.

What's the key learning?

Today the Reserve Bank of Australia (RBA) woke up and chose to rock our reasonably-steady boat (or house)… 

Instead of obsessing over the Beckham documentary this month like the rest of us, Michele Bullock and her gang decided to be party poopers and lift the cash rate.

This time, the cash rate has gone up by 0.25% from 4.10% to 4.35%.

The four month streak of good luck for mortgage holders has run out.

Take several seats, Michele. 

This rate rise comes after inflation picked up for the September quarter to 1.2%, up from 0.8% in the June quarter.

This has spooked the RBA, especially since expert economists were expecting inflation to be around 1.1%

The biggest contributors to inflation in the September quarter were:

Most experts were predicting one final rate rise in 2023, and now that prediction has come true.

The question now is have we really hit the end of cash rate rises?

Especially since the RBA are determined baddies and it looks like they’re still gunning hard to knock inflation down to their goal of 2-3%.

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 May 2022, 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%
  • July 4th 2023: 4.10%
  • August 1st 2023: 4.10%
  • September 4th 2023: 4.10%
  • October 3rd 2023: 4.10%
  • November 7th 2023: 4.35%

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