RBA returns with a rate hike: Cash rate target increased to 3.35%

• This 25 basis point (bp) hike takes the cash rate target to 3.35%, an increase of 325 basis points since May 2022
• 52 lenders have passed on all rate hikes in full last year
• The average variable interest rate in Mozo’s database could rise to 5.93% after the rate hike
• Borrowers need to find an extra $91 a month on a $600,000 loan 
• The average mortgage size in November 2022 was $604,346 up from $594,938 in the previous month
• Borrowers could save up to $5,820 a year off their mortgage by refinancing to the lowest variable rate in the Mozo database (4.29%) from the average variable interest rate (5.68%)
• Currently the lowest variable home loan rates in Mozo’s database is 4.29% through The Mutual Bank

The RBA has started the year with a bang, increasing the cash rate by 25 basis points. Mortgage holders will now need to find an extra $91 a month to tackle this repayments increase, on a $600,000 loan.^

“The RBA has used the first meeting of the year to move yet again. This is the ninth consecutive meeting that they have increased interest rates, so borrowers are not getting any respite from these rate increases,” says Peter Marshall, Banking Expert at Mozo. 

The cash rate has now increased 325 basis points since May 2022. Last year, 52 of the 95 lenders passed on the rate hikes in full to their customers.

“Many people who have stayed with their lender since the beginning of these rate increases will be paying a lot more than they need to. Some lenders have not increased rates by as much and it certainly pays to look around and see if there’s a better deal out there than the one you’re on right now,” says Peter Marshall, Banking Expert at Mozo. 

Home loan customers could save up to $5,820 a year on a $600,000 owner occupier mortgage if they refinanced from the average variable interest rate (5.68%) to the lowest rate in the Mozo database (4.29%).

Mortgage holders with the average variable interest rate (5.68%) on a $600,000 loan would see an increase of $91 a month in repayments, which adds up to $1,092 a year. 

“Household budgets are being hit from a few different directions at the moment. There’s the cost of living but also these rate rises and they are increasing repayments significantly for many people.”

“The RBA is likely to increase rates at least once more, if not twice more after this, so the game is not over yet,” says Peter Marshall, Banking Expert at Mozo.  

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^For owner occupiers paying principal and interest on a loan with 80% LVR on a $600,000 loan