RBA raised rates by 0.25% for the second time in just four weeks

Font size :

The Reserve Bank of Australia (RBA) has lifted interest rates by 0.25% to 7.25% - the highest level in 12 years - in its bid to curb the raging inflation.

The back-to-back move brings the average standard variable rate to 9.07%. This means property owners will need to come up with an extra $89 per month on mortgage repayments for a $500,000 loan.

"Having weighed both the international and domestic information available, the board concluded that a further tightening in monetary policy was needed to secure an inflation rate of 2-3% over time," RBA governor Glenn Stevens said in a statement.

He hasn't ruled out further rate hikes ahead. "Inflation is likely to remain relatively high in the short term, and will probably rise further in year-ended terms, before moderating next year in response to slower growth in demand," Stevens added.

The Real Estate Institute of Australia (REIA) warned that the move will hurt many Australian households.

"The rate decision is a blow for homebuyers," said Noel Dyett, REIA president. "Interest rate rises are a blunt tool directly affecting all homebuyers across Australia, including those who haven't benefited from equity gains in their property. Renters too feel the pain from the rate rises as lessors raise rents to cover loan costs."

Dyett added that rental affordability is worsening, notably in low income areas such as Tasmania where incomes have not kept pace with rent increases.

Braxton Chase CEO Andrew Donnelly urged investors to avoid panic selling, and rather stick to long-term strategic plans in the current environment of rising rates.
"While most astute investors were able to manage rising rates, some investors maybe tempted to sell up as debt commitments increase and an environment of fear and uncertainty sets in," he said.

"Rate movements should be factored into any property investment strategy. By all means cut your losses and run if it's abundantly clear that too many variables are working against you, but avoid selling decisions based on singular factors such as rising interest rates and populist negative sentiment that may go with that."

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Sunday, Sep 24, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords