More bad news for Melbourne home loan mortgage holders as the RBA today hiked the official cash rate to 4.35% – its third increase this year.
Australia’s central bank raised its rate by 0.25% today, pointing to ongoing economic disruption as the reason.
‘The conflict in the Middle East has resulted in sharply higher fuel and related commodity prices, which are already adding to inflation.
‘There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services.
‘Short-term measures of inflation expectations have also risen,’ said the RBA today.
‘In light of these considerations, the Board assessed that inflation is likely to remain above target for some time and that the risks remain tilted to the upside, including to inflation expectations.
‘It was therefore judged appropriate to increase the cash rate target,’ the Reserve Bank added.
Today’s decision was widely expected, given headline inflation surged to 4.60% on the back of a surge in oil prices.
However, and this is the good news, the underlying rate held steady at 3.30%.
Deputy Governor Andrew Hauser flagged the likelihood of further tightening last month, describing the outlook as a ‘central banker’s nightmare’.
Not the most optimistic outlook, was it? For borrowers, the impact is likely to be immediate.
When passed on by lenders, a homeowner with a $600,000 mortgage will likely now pay about $91 more per month, according to Canstar.
In fact, over the February, March and May increases so far this year, repayments will have risen by around $272 a month, or roughly $3,264 a year.
A borrower with an $800,000 mortgage faces an extra $122 per month, or $4,356 annually, while repayments on a $1 million loan rise by about $152 a month, adding $5,436 a year to the costs.
Some experts believe today’s move is about getting ahead of the next quarter, when headline inflation is tipped to increase even more, as the RBA alluded to today with its ‘risks remain tilted to the upside’ line.
Three RBA increases in 2026 effectively wipe out last year’s triple-hit of rate cuts.
Canstar data also showed a flurry of rate rises with 18 lenders lifting around 500 fixed rates in a single week last month, while variable rates ticked up by an average of 0.25%, taking the average variable rate to 6.42%.
Should we see a rate drop from the RBA in the future, you can find out more in our recently published article on preparing for a rate cut.
If you would like to review your mortgage rate, contact Mortgage Broker Melbourne. We are one of the most positively reviewed mortgage brokers in Melbourne.
Additionally, we can offer you tips on how to uncover lower rates, boost your savings, consolidate other debts, and take the pressure off increases in household costs.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!