Today the Reserve Bank of Australia announced an increase of 0.25% to the cash rate, this is the first increase since November 2023. The increase was widely expected by financial markets, given the rise in inflation to 3.8%. The target inflation figures set by the RBA are 2% to 3%.

This cash rate increase will flow through to home loan interest rates over the coming weeks, as lenders adjust their variable rates in response.

What does this mean for you?

For many Australians, this change will result in:

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• Higher minimum home loan repayments on variable rate loans
• Reduced borrowing power for new purchases
• Increased pressure on household budgets
• More competition between lenders for refinances

Once each lender has reviewed their rates, they will contact anyone with a variable home loan to advise of any changes to your repayments. If you have a direct debit in place with your lender, they will adjust your future minimum repayment. If you have set up automated recurring repayments with your bank, please insure you adjust future payments accordingly.

Now is also a good time to review whether your current loan is still right for you.

What should you consider doing now?

There are a few simple steps you can take:

1. Review your current loan
We would be happy to provide you with a loan comparison to see if you can save money with a more competitive rate or better features with both your current lender or with another lender.

2. Review your budget
Make sure your loan repayments still fit comfortably within your monthly cashflow, or if you need to adjust your budget to allow for a repayment increase, especially if rates rise again later this year.

3. Speak with your broker
Every borrower’s situation is different. You may benefit from refinancing, fixing part of your loan or restructuring your lending with a longer term or different loan features.

If you are planning to buy soon

This rate decision may affect:
• How much you can borrow
• Your loan approval conditions
• Your monthly repayments

Getting a loan pre-approval is important so you can move forward with confidence and avoid surprises.

The Reserve Bank’s goal with these changes is to manage inflation and keep the economy stable. While rate rises can be stressful, there are still options available and we are here to help you navigate them.

If you’d like a free review of your home loan or want to discuss what this change means for you personally, please don’t hesitate to get in touch.

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