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RBA reveals October 2022 cash rate
Find out — after five consecutive months of cash rate increases — if the Reserve Bank of Australia has raised interest rates again, in this special announcement brought to you by Legal Home Loans (LHL).
Jerome Doraisamy
In the October interest rate decision from the RBA, the board decided to increase the cash rate by 25 basis points to 2.60 per cent.
“Today’s increase in interest rates will help achieve this goal, and further increases are likely to be required over the period ahead. The cash rate has been increased substantially in a short period of time. Reflecting this, the board decided to increase the cash rate by 25 basis points this month as it assesses the outlook for inflation and economic growth in Australia,” he said.
“As is the case in most countries, inflation in Australia is too high. Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role.
“A further increase in inflation is expected over the months ahead, before inflation then declines back towards the 2–3 per cent range. The expected moderation in inflation next year reflects the ongoing resolution of global supply-side problems, recent declines in some commodity prices and the impact of rising interest rates. Medium-term inflation expectations remain well anchored, and it is important that this remains the case. The bank’s central forecast is for CPI inflation to be around 7¾ per cent over 2022, a little above 4 per cent over 2023 and around 3 per cent over 2024.”
Reflecting on the decision, Legal Home Loans director of sales Cullen Haynes said that today’s cash rate increase is now the fifth large increase in a row and that LHL expects most banks will pass it on to borrowers within the week.
It is not clear at this time, Mr Haynes mused, what further increases are coming, but noted that it appears this pattern will continue for the next couple of months.
“We do expect the increases to stabilise in the new year,” he predicted.
“Mortgage holders locked into historically low fixed rates should be aware that there will be a significant increase in repayment when their fixed term ends, which they may want to start budgeting ahead of time for. Anyone concerned about rising mortgage repayments and impact on household budgets should speak to their bank or broker about the best structure suited to their needs as soon as possible.”
“For those seeking new loans, borrowing capacity will be decreased, as banks factor a higher servicing rate into household affordability when assessing home loan applications,” Mr Haynes went on.
“It is now more important than ever to gauge borrowing power as well as obtain pre-approval to confirm a purchasing budget before looking at properties this spring buying season.”
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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