RBA hikes official cash rate by 50 basis points to 0.85%. What does this mean for your loan?

On Tuesday the 7th of June, the Governor of the Reserve Bank, Philip Lowe, announced a massive 50 basis point rise.

Three months ago, this sort of rise was unfathomable in the market, and even current economists predictions being exceeded, with many pricing in between a quarter of a percent up to a 40 basis point rise, but with inflationary pressures, the call was made.

“Inflation in Australia has increased significantly,” said the RBA Governor in a statement on Tuesday. “While inflation is lower than in most other advanced economies, it is higher than earlier expected.”

The ongoing target for inflation is set to 2-3%, but with it currently sitting at 5.1% in the March quarter, levers are currently being pulled.

Households and small businesses already burdened with the massive increase to supply chain costs, including petrol, food, materials and energy will be looking for ways to balance out their cost load, while larger repayment costs adding to this pressure.

It may appear on the surface the increase to many of these costs can be drawn back to recent weather and geo-political events, such as the east-coast floods and Russia-Ukraine conflict.

While most lenders have passed on the rate increase in full, many have announced new discounts to products and new clients, thus making time to review your personal and business finances more important than ever.

The benefit of engaging independent mortgage brokers puts you at the centre of everything, not the retention of an existing lender.

Reach out to see how we can help you today.