RBA lifts rates by 0.25% with more hikes to come – how to beat rising rates

The Reserve Bank has today increased the cash rate by 0.25 percentage points to 3.35 per cent, with more hikes to come.

In today’s statement, Governor Lowe made it clear further increases to the cash rate will be needed in coming months to bring inflation back into the target range.

As a result of today’s increase, the average borrower with a 25-year, $500,000 loan at the start of the hikes could soon be paying a total of $908 more a month on their mortgage across the nine hikes.

That’s a 39 per cent increase to their monthly repayments since May 2022.

0.25% HIKE: Increase in monthly repayments

Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining. Starting rate is the RBA avg. existing owner-occupier variable rate of 2.86% in April and assumes banks pass the hikes on in full.

After today's increase, the average owner-occupier who hasn’t renegotiated their mortgage could soon be paying an estimated rate of 6.11 per cent.

But a competitive rate in the current market can still be found at under 5 per cent. RateCity.com.au estimates that a handful of lenders will still be offering rates below 4.75 per cent.

RateCity.com.au research director, Sally Tindall, said: “While plenty of borrowers would like to see the end of cash rate hikes, the RBA is focused on getting Australia’s inflation problem back under control.”

“The latest data shows inflation is at 7.8 per cent, a worryingly high level. A hike sends a very clear message that there is more work to be done to get this figure down,” she said.

“On a half a million-dollar loan, every month you wait to refinance costs you up to $400 a month. That’s the same as buying brand new AirPods every month.

“Take action now. As property prices slide, you might find you can’t access the biggest discounts. Worse still, you might find you can't refinance at all,” she said.  

How much can you save by refinancing?

Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining. Includes switch costs, interest and other fees. Assumes cash rate rises to 3.85% as forecast by Westpac.

Compare home loans in Australia