BREAKING: Homeowners hit with bigger rate hike

Homeowners have been hit with a larger than expected interest rate hike adding more pressure on household budgets.

The Reserve Bank today lifted the official cash rate by 50 basis points to 0.85 per cent.

That’s higher than the market expectation of 40 basis points.


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It’s also the first back-t0-back interest rate increase since February 2000.

The rate hike will add around $133 dollars to monthly repayments on a $500,000 mortgage.

In a statement, RBA Governor Philip Lowe has warned that inflation is likely to be worse than predicted.

“Inflation is expected to increase further, but then decline back towards the 2–3 per cent range next year. Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago,” Dr Lowe said.

The Reserve Bank has repeated its warning that rates will continue to increase, with experts predicting the cash rate could go above 3 per cent by the end of next year.

“The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”

More to come.