People who own houses in Australia have been fuming at the several interest rate increases that occurred recently. After being burdened by four different rises in interest, homeowners now have to handle a fifth one, which will make some pay an additional $1,000 monthly.
Australian homeowners with a mortgage of $800,000 will now have over $4,300 in repayments every month. This all comes after a meeting held by The Reserve Bank. The cash rate was increased by 50 basis points by the board, something that will make life even harder for those who bought a house recently. Now, the cash rate is 2.35%, a big change from the previous 1.85%.
Rates Reached an All-Time High
What’s worse is that the last three rate increases have also been worth 50 basis points, making this last interest rate explosion more troublesome. Not only is this going to force homeowners to pay more towards their mortgage each month, but it is also a huge growth, as it managed to take the cash rate to the highest level since 2014.
It might come as a surprise, especially considering it’s been a long time since the RBA inflated interest rates. The last time it happened was in 2010, after which interest rates only decreased. The highest interest rates that Australia has ever seen were back in January 1990, when they were 17.5%. Fortunately, they went down and sat at around 3.93% since then.
Nobody expected the interest rates to grow, as the RBA gave people no reason to suspect this. The cash rate got to the lowest percentage ever during the COVID-19 pandemic, reaching 0.1%. Then, the RBA mentioned they will not be boosting the rates before 2024.It seems that plans have changed, though, which could be due to rising living costs and inflation.