View
comments
Australians with a mortgage will face big increases in their monthly repayments, after The Reserve Bank of Australia raised the cash rate by 0.25 percentage points to 0.35 per cent.
It is the RBA's first rate increase since November 2010 and after holding the rate at a record low 0.1 per cent since November 2020.
RBA governor Philip Lowe said the board judged that now is the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic.
'The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected,' Dr Lowe said.
'There is also evidence that wages growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions.'
More than 1.5million borrowers will be coping with a variable mortgage rate increase for the first time.
A borrower with a typical $600,000 loan - on a low 2.29 per cent variable rate - would see their monthly repayments rise to $2,306 from $2,384 should their bank pass on the RBA increase in full, taking their variable rate to 2.54 per cent.
Three of Australia's Big Four banks - ANZ, Westpac and NAB - also expect the Reserve Bank to take the cash rate to two per cent by 2023 as rates increase seven more times, with more pain possibly coming in June.
St George, owned by Westpac, was the first bank to hint at an increase in variable mortgage rates.
