RBA raises interest rates by three per cent in 2022
After a year of no changes to interest rates in 2021, borrowers have been walloped by eight increases to the cash rate in 2022.
In May this year, the Reserve Bank of Australia (RBA) began increasing the cash rate, raising it by three per cent per annum, in a bid to tackle high inflation.
Governor Philip Lowe said the substantial cumulative increases to interest rates this year have been necessary to ensure that the current period of high inflation is only temporary.
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“High inflation damages our economy and makes life more difficult for people. The Board’s priority is to re-establish low inflation and return inflation to the 2–3 per cent range over time.
“The Board recognises that monetary policy operates with a lag and that the full effect of the increase in interest rates is yet to be felt in mortgage payments.”
AMP chief economist Shane Oliver told Morgage Choice the RBA’s actions had taken variable mortgage rates to their highest levels since 2012.
“In other words, roughly 10 years of falling mortgage rates have been reversed in eight months.”
With the cash rate now sitting at 3.10 per cent, Mr Lowe said the Board expects to increase interest rates further over the period ahead.
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“It is not on a pre-set course. [The Board] is closely monitoring the global economy, household spending and wage and price-setting behaviour.
“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.
“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”
PropTrack executive manager of research Cameron Kusher told Mortgage Choice he believes there’s opportunity in the competition between the banks for business.
“Be prepared to shop around for a better mortgage deal, especially as interest rates are changing,” he said.
See a full list of interest rate decisions by the RBA here.
