Final hammer? Hawkish RBA stomps inflation with 0.25% May rate hike

RBA Martin Place

After a month of uncertainty, the Reserve Bank of Australia has pumped the brakes once more with a 0.25% hike to the official cash rate, lifting it to a sky-high 3.85% p.a. 

Heated debate anticipated today’s decision, with many analysts predicting a “coin flip” between a hike and no hike. The most dovish argued that declines in retail spending and inflation were enough to justify a pause, while the most hawkish pointed to signs of worldwide economic uncertainty and mortgage stress at home.

However, with inflation still well outside the RBA’s target, the central bank has given the economy another hit to ensure the slowdown sticks. Otherwise, they could risk undoing all the progress the previous hikes have made.

In a post-meeting statement to the press, RBA governor Philip Lowe explained, "The Board held interest rates steady last month to provide additional time to assess the state of the economy and the outlook."

"While the recent data showed a welcome decline in inflation, the central forecast remains that it takes a couple of years before inflation returns to the top of the target range."

But with symptoms of contraction already cooling the overheated economy, today’s announcement may have brought us closer to the cash rate peak. Lowe softened his language considerably around how much higher rates will have to go to effectively curb inflation.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve."


Are interest rate hikes done for the year?

Collage of a man sitting atop a rate hike.

With interest rates now stratospheric, many homeowners will wonder how much further the RBA must go in its war against inflation. Indeed, in a survey conducted earlier this year by Mozo, only 39% of respondents can afford rate rises from this point forward. 

“People are already feeling the cost of living pressures acutely,” explains Mozo banking expert Peter Marshall. “But at the same time, inflation hasn’t come down far enough. Spending hasn’t really slowed as much as the Reserve Bank would like.”

Today’s decision, in the central bank’s eyes, may prove painful but ultimately necessary to avoid the caustic effects of long-term inflation. 

Many of the Big Four Banks, however, reckon 3.85% might be as high as interest rates will go, though there is always potential for a 4.10% terminus in June. Either way, we now sit firmly in territory strong enough to contract the over-inflating market. 

“I think we’re either at – or very close to – the peak of the cash rate,” concludes Marshall.

How far have rates come since 2022?


Which banks have increased rates?

Collage of people adding blocks.

We’ll track which lenders have changed interest rates as word comes in. To see how your lender compares, visit our home loan comparison page.

Home Loan Old rate New rate Effective date Rate change Naughty or Nice
6.39 6.64 5 May 2023 0.25
ANZ Index Variable Rate (Owner Occupier, Principal & Interest)
7.89 8.14 12 May 2023 0.25
5.64 5.89 4 May 2023 0.25
6.49 6.79 8 May 2023 0.25
5.7 5.95 16 May 2023 0.25
7.49 7.74 9 May 2023 0.25
8.12 8.5 12 May 2023 0.25
8.28 8.53 12 May 2023 0.25
7.95 8.2 12 May 2023 0.25
8.05 8.3 12 May 2023 0.25
6.29 6.54 12 May 2023 0.25
7.11 7.36 11 May 2023 0.25
7.99 8.24 16 May 2023 0.25
5.49 5.74 22 May 2023 0.25
8.21 8.46 16 May 2023 0.25
5.79 6.04 9 May 2023 0.25
loans.com.au Smart Home Loan 90 (Owner Occupier, Principal & Interest)
6.29 6.54 5 May 2023 0.25
6.46 6.71 19 May 2023 0.25
8.11 8.36 13 May 2023 0.25
8.02 8.27 12 May 2023 0.25
7.75 8.0 12 May 2023 0.25
8.11 8.36 16 May 2023 0.25
8.36 8.61 16 May 2023 0.25
8.48 8.73 12 May 2023 0.25
6.19 6.44 11 May 2023 0.25
8.08 8.33 16 May 2023 0.25

Read last month's Reserve Bank interest rates update.

Home loan comparisons on Mozo

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Last updated 24 July 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

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    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
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    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Basic Home Loan

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    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
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    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

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    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
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    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Optimum Fixed Rate Home Loan

    • Owner Occupier
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    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,899
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    Lock in a competitive interest rate and enjoy peace of mind for the fixed period. Available for owner occupied new and refinanced home loans with at least 20% deposit. Split option available as well as offset and redraw. Noapplication, ongoing or banking fees. Third Party fees may be applicable - payable within loan repayments. Extra repayments up to $20K per annum permitted. Apply online, 100% member owned credit union.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • OMG Home Loan

    • Owner Occupier
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    • <60% LVR
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

  • Flex Home Loan

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    5.99 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,995
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    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

  • Express Home Loan

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    Interest rate
    6.01 % p.a.
    Variable
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    6.14 % p.a.
    Initial monthly repayment
    $3,001
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    Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

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    6.14 % p.a.
    Variable
    Comparison rate
    6.38 % p.a.
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    $3,043
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    Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

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    $3,043
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    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

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    6.20 % p.a.
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    6.42 % p.a.
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  • Fixed Rate

    • Owner Occupier
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    Interest rate
    6.54 % p.a.
    Fixed 2 years
    Comparison rate
    7.10 % p.a.
    Initial monthly repayment
    $3,174

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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