Who Has Raised Mortgage Interest Rates Thus Far in November?

The Reserve Bank of Australia (RBA), Australia’s central bank, broke its 11 years of consistency by hiking the interest rate in May 2022. The bank has continued the rise throughout the year to slow down inflation. It has resulted in banks or lenders increasing their interest rates on loans. The mortgage interest rate hike has led to increased Equally Monthly Installments (EMIs).

Let us understand how home loan interest rates are directly connected to the need to tame inflation and who has increased current mortgage rates. Lenders consider the cash rate when deciding the interest rates they give on home loans and savings accounts since it affects how much financial products cost. It indicates that actions taken by lenders themselves and the cash rate affect the home loan interest rates a borrower ultimately pays.

The COVID-19 pandemic, which sparked a recession, was substantially to blame for the decline in the cash rate. Because of the recession, the economy needed stimulation, and lowering interest rates to promote expenditure was one strategy. The RBA is raising the cash rate to normalise the economy now that inflation has increased and unemployment is low. Throughout the rest of 2022, more increases in home loan interest rates in Australia are anticipated.

How Much More Will Your Mortgage Cost You Now?

The Reserve Bank of Australia increased the cash rate by 25 basis points this month, marking its seventh consecutive rate increase. If homeowners aren’t already feeling the strain financially, they undoubtedly will shortly. The cash rate now stands at 2.85% in Australia.

Because interest accrues over a longer period of time than it does over a shorter period, the additional amount of a borrower’s repayments will be larger if they have a longer-term loan. A longer-term loan will still cost less in the long run than a short-term one, though, because of the total amount the borrower pays. The amount of the RBA rate increase that each lender decides to pass on varies, and this estimate does not account for any bank fees or levies, so it is advised to contact a lender or a bank for a precise figure.

For instance, repayments for a homeowner with a $750,000 mortgage will now cost $1,251 more than they did before the first rate increase. This is comparable to the price of a new television or three monthly energy bills. According to the RBA’s average current customer rate at the time, these payback estimates are based on a 25-year loan with an initial mortgage interest rate of 2.86% in April.

Which Lenders Have Moved On Home Loan Interest Rates?

With the RBA hiking mortgage rates, Australian banks and other lenders have also increased home loan interest rates. The following table compares the mortgage rates change that will aid the borrowers to keep a track of the housing loan interest rates they are likely to be charged.

Note: The interest rates are provided as on November 21, 2022.

Australia, like other nations, is taking different measures to fight inflation. This, however, is becoming problematic for home loan seekers due to the hike in housing loan interest rates. This piece will help the borrowers get their desired loans at the desired rates and fulfil the dream of owning a home in Australia.