At the Reserve Bank of Australia (RBA) meeting today it was decided to raise the cash rate by 50 basis points, taking the base rate of cash to 1.35%.
According to a number of experts, this RBA decision will compound the financial pressures facing Australians, as food, petrol and household utility costs such as gas and electricity continue to rise.
Economist Paul Ryan from PropTrack says the cash rate hike signals the RBA’s concern about inflation, which has risen faster than anticipated and has decided to increase rates quickly to get it under control.
For many Australians, the consequences of the cash rate increase will be a jump in their home loan interest rates as lenders pass on the increase. If a lender such as Westpac increases its standard variable rate to 5.73%, and therefore increasing its repayments on a $500,000, 25 year loan by $149 per month.
So, with the current climate of rising interest rates, now may be the most appropriate time to review your loan to refinance with alternative lenders. With the cost of living rising rapidly, Australians will be asking how to lessen the burden on their hip pocket, and getting a better deal on your home loan is a great place to start.
This article was written by Darrel Roberts, Head of Mortgage Lending Services at Inspired Money with over 30 years of experience in mortgage lending and accounting he is an expert in his field.
