(domain.com.au)The Reserve Bank has lifted interest rates by 0.25 per cent to 7.25 per cent, increasing the official cash rate to the highest in almost 12 years, while Australia’s banks are expected to add on another 0.15 per cent to absorb higher loan funding costs. The move represents the central bank’s first back-to-back rate rise in more than four years.
For a standard 25-year, $200,000 mortgage, today’s rise increases repayments by about $34 a month. Those on a $300,000 mortgage over the same period would face an extra $57 in repayments. That extra burden, though, assumes the commercial banks will pass on only a 25 basis-point increase, raising the standard variable mortgage to at least 9.25 per cent.
Since the end of last year, the main banks have raised their lending rates by more than the RBA’s moves, citing increased borrowing costs overseas. Some economists are tipping the banks will raise their rates by as much as 0.4 percentage points – including the Reserve Bank’s 0.25 per cent raise.
A Credit Suisse Index was tipping a 94 per cent chance of such a rise earlier today.
Today’s increase is the 12th consecutive rate rise since May 8, 2002 when the benchmark rate sat at 4.25 per cent. .(read more)