Variable interest rates are the rate type that is typically affected by a cash rate hike. Put simply, if you’re on a variable rate home loan and your lender chooses to raise rates in line with the cash rate, then your interest rate and therefore your monthly mortgage repayments will increase.
Although there are uncertainties with continued disruptions from Covid-19, especially in China; the war in Ukraine, and the decline of consumer purchasing power from higher inflation, the Australian economy has shown resilience and the outlook for economic growth remains positive.
The Board has committed to doing what is necessary to ensure that inflation in Australia returns to target over time. RBA Governor Philip Lowe, states that a further lift in interest rates over the period ahead will be required. He also went on to say that The Board will continue to closely monitor the incoming information and evolving balance of risks and it will then determine the timing and extent of future interest rate increases.
With this being said, it is clear that interest rates are likely to rise further over the coming months and households should start preparing for increases in their minimum monthly mortgage repayments. Variable interest rates are the rate type that is typically affected by a cash rate hike. Put simply, if you’re on a variable rate home loan and your lender chooses to raise rates in line with the cash rate, then your interest rate and therefore your monthly mortgage repayments, will increase.
If you’re currently on a fixed rate home loan, your interest rate will not change for the fixed term duration that you have agreed to. However, once this fixed term ends, you may find that your home loan reverts to the lenders’ standard variable rate. This may be higher than your current fixed rate, and your mortgage repayments may increase too.
A review of your home loan with a Bernie Lewis Home Loans mortgage broker is a great place to begin.
Use the calculator on our website to model what your repayments would be at various increased amounts https://www.bernielewis.com.au/calculators-tools/loan-repayment-calculator/ If you feel that your household budget will be stretched, address it now if making repayments is likely to become difficult. A Bernie Lewis Home Loans mortgage broker can assist you with this.
Call us on 8300 8300 or email email@example.com to talk to a Bernie Lewis Home Loans mortgage broker today.