The Reserve Bank of Australia (RBA) increased the official cash rate by 25 basis points to 0.35% at today’s board meeting.
This is the first cash rate hike in more than a decade and comes after core inflation grew by 3.7% over the year to March – well above the RBA's 2-3% target.
With the latest inflation data, it shows that Australia had recorded the highest quarterly and annual increase in more than two decades.
The last time the RBA increased interest rates was in November 2010. The official cash rate has been at a record low of 0.1 per cent since November 2020.
Mortgage holders have been warned to prepare for a double rate rise. The cash rate is largely expected to jump by 1 per cent by the end of this year and reach 1.25 per cent next year.
Lenders are likely to lift mortgage rates in line with the cash rate increase, which may result in big changes to variable home loan repayments.
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Rachael Bland – Founder & CEO