RBA Lifts Cash Rate by 0.25% to 4.35% , Marking a 12 – Year High

The RBA board on Tuesday 7^th November 2023 decided to hike its cash rate 25 basis points to 4.35%, a 12-year high from RBA governor Michele Bullock's statement: Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago. The latest reading on CPI inflation indicates that while goods price inflation has eased further, the prices of many services are continuing to rise briskly. While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected. CPI inflation is now expected to be around 3.5 per cent by the end of 2024 and at the top of the target range of 2 to 3 per cent by the end of 2025. The Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe. Ms Bullock also said the RBA may need to increase rates further, however "whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks."

What might your increased mortgage payments amount to with the current cash rate at 4.35 percent?

A quarter-point rise in the cash rate is expected to result in an approximate $100 increase in monthly payments for a typical mortgage of around $600,000.  

Loan size at start of hikes	Total increase after 12 hikes	Increase of 0.25%	Total increase across 13 hikes
$500,000	$1,134.00	$76.00`	$1,210.00
$750,000	$1,701.00	$114.00	$1,815.00
$1 Million	$2,269.00	$152.00	$2,420.00