Interest Rates Update March 2022

Interest Rates Update 2022

After months of saying that the cash rate would likely remain at its current record low throughout the year, RBA Governor Philip Lowe said that it was “plausible” the central bank could hike interest rates in 2022.

Lowe said conditions weren’t yet right to raise the cash rate from its current record low of 0.1%, but that the situation in Eastern Europe – and associated supply issues and surges in commodity prices – could force a hike by the end of the year, according to  The Australian report.

Meanwhile, the big four have gone ahead and are taking turns in hiking fixed rates across the board, with the latest being the National Australia Bank (NAB), although they cut P&I owner occupied rates by 10 basis points.

The Commonwealth Bank (CBA) has brought its rate hike prediction forward from August this year to June  at the first opportunity following the federal election.

CBA now believes the Reserve Bank (RBA) will hike rates by 0.15 per cent in June, followed by three more 0.25 per cent increases to finish the year with a 1.0 per cent cash rate.

CBA’s head of Australian economics, Gareth Aird, said CBA also expected another hike in the first three months of next year to bring the rate to 1.25 per cent.

Current Interest Rates (Big 4)

What will happen when the RBA raises rates?

It has been more than 11 years since the RBA increased official rates, with the last hike in November 2010.

Since then, the RBA has cut the cash rate 18 times and that means those who purchased their first home in the past decade have never experienced a rate hike.

Canstar research found that a cash rate hike of 0.5 per cent would take the average variable rate to 3.55 per cent.

If lenders were to match the increase, someone with a 30-year, $500,000 mortgage could pay an extra $137 per month.

A cash rate hike of 1 per cent would take the average variable rate to 4.05 per cent.

This means the same borrower above could see their repayments increase by $280 per month.

If you’re looking to take up a new loan or even refinance, act fast before the rates continue going up. Give Darren a call on 0452 339 778 or email him at [email protected] to discuss what options you have available. 

Note: The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.