The Reserve Bank imposed a further 0.5 percentage point increase, marking the fifth consecutive monthly increase in interest rates for Australian mortgage borrowers.
A 50 basis point increase in the cash rate raises it to a seven-year high of 2.35 percent from its previous six-year peak of 1.85 percent.
For the first time since it began announcing a target interest rate in 1990, the RBA has now hiked the cash rate for five consecutive months.
In May, June, July, August, and now September, borrowers were hit with rate increases of 2.25 percentage points – the largest succession of annual rate hikes since 1994.
The Reserve Bank imposed a further 0.5 percentage point increase, marking the fifth consecutive monthly increase in interest rates for Australian mortgage borrowers.
A 50 basis point hike in the cash rate raises it to a seven-year high of 2.35 percent, from its previous six-year peak of 1.85 percent.
As a result of the central bank’s efforts to combat the most severe inflation since 1990, the average monthly mortgage payment on a $600,000 mortgage will increase by $173.
This occurs just three weeks before fuel excise increases to 44.2 cents per litre, which could cause average unleaded gasoline prices to rise again beyond $2 per litre on September 29.
Both Labor Prime Minister Anthony Albanese and Treasurer Jim Chalmers have suggested they would not continue the former Coalition government’s three-billion-dollar, six-month reduction of excise to 22.1 cents per litre.
The Australian Competition and Consumer Commission, entrusted with eradicating price gouging, observed that despite the duty being cut in half, average petrol prices continued to rise to $2.10 per litre due to increasing crude oil costs.
Gina Cass-Gottlieb, the chairwoman of the ACCC, remarked that despite the excise drop, gasoline prices remained at a 14-year high, and she was concerned that in three weeks, gasoline sellers may become shady.
In the days leading up to, and on the day of, or after the reinstatement of the full amount of fuel excise, we do not anticipate unusual or abnormal wholesale and retail price hikes, she stated.
Philip Lowe, governor of the Reserve Bank, has hinted that this rate hike will not be the last. Previously, he said that he saw a cash rate of 2.5% as neutral.
The Commonwealth Bank, Australia’s largest mortgage lender, anticipates that the RBA will hike rates by 0.25 percentage points in November, bringing the cash rate to 2.6%.
For the first time since it began announcing a target interest rate in 1990, the RBA has now hiked the cash rate for five consecutive months. Borrowers have experienced rate hikes of 2.25 percentage points in May, June, July, August, and now September – the steepest succession of annual increases since 1994. (pictured are houses at Paddington in Brisbane)
When the one-time effect of the implementation of the Goods and Services Tax (GST) in 2000 is subtracted, the inflation rate for the year ending in June increased by 6.1%, the greatest annual increase since 1990.
This was more than double the wage price index of 2.6%, indicating that the majority of workers are seeing a reduction in real wages as inflation increases at a rate greater than double the rate of pay.
A person earning the average full-time wage of $92,030 in Australia can no longer qualify for a $600,000 loan, since banks are now required to evaluate a potential borrower’s ability to handle a three percentage point increase in variable mortgage rates.
August’s median home and unit price decrease of 1.6% to $738,321 was the steepest monthly decline since January 1983, according to CoreLogic data.
In July, the Australian Bureau of Statistics reported an 18.4% increase in consumer expenditure, indicating that rate hikes had failed to dampen consumer activity.
However, subsequent rate increases in August and September may begin to have an impact.
This occurs just three weeks before gasoline excise jumps to 44.2 cents per litre, which could push average unleaded petrol prices back above $2 per gallon on September 29. (pictured is a stock image)
What another 0.5 percentage point rate increase in September will entail
$50000: $145 increase to $2,472 from $2,327
$600,000: $173 increase to $2,966 from $2,796.
$700,000: An increase of $202 to $3,460 from $3,258.
$800,000: $231 more at $3,955 than $3,724
$9,000,000: $260 increase to $4,449 from $4,189.
$1,000,000: $289 more at $4,943 than $4,654