Upward cash rate trend: What can you do if your repayments are too high?

The Reserve Bank of Australia (RBA) has continued its trend of increasing the cash rate, moving it three months in a row, from 0.85 percent to 1.35 percent.

According to our data, all lenders in our panel increased variable interest rates on home loans in line with the cash rate increase last month. This means homeowners with variable rates or split loans will have already noticed an increase in repayments.

On top of this, we are also seeing fixed rates increasing across the board, particularly in the shorter terms. For example, NAB recently increased one-year fixed rates for owner occupier principal and interest (P&I) loans by 1.1 percentage points and two-year fixed rates by 1 percentage point. CommBank just hiked all its fixed rates for owner occupier and investor P&I loans by 1.4 percentage points. This means people looking to refinance will find interest rates have significantly increased, regardless of the type of loan you are considering.

Silver lining for buyers: Property market cools

While home loan interest rates have been climbing, on average, house prices across capital cities have decreased over the last month. Sydney house prices dropped 1.6 percent, Melbourne prices dropped 1.1 percent and Hobart 0.2 percent over the month to 30 June. Brisbane has slowed with house prices growing only 0.2 percent over the time frame, Perth grew by 0.4 percent, Darwin 0.9 percent, Canberra 0.3 percent, with Adelaide showing the biggest growth of 1.3 percent.

This could be good news for investors and buyers as it signals decreased competition. The increase in the cash rate is also good news for savers who are likely to see increased interest rates on their savings accounts, which could help save for a deposit faster.

With further cash rate rises expected throughout 2022, call FIA today to find the right loan for your individual needs.

*** Disclaimer

The information provided herein is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation, any party seeking to rely on its contents or otherwise should make their own enquiries and research to ensure its relevance to their specific personal and/or business requirements and circumstances.