Today the RBA announced a further lift of 0.5 basis points for the target cash rate. This is the fifth consecutive month of rate rises in the current tightening cycle, raising the cash rate from 0.1% in April to 2.35% today. This rise is highly likely to be passed on in full to household mortgage holders.
PEXA Chief Economist, Julie Toth, said: “This decision was widely anticipated and expected. It reflects elevated inflation pressures in Australia and globally, supply shortages across the construction industry and in other key sectors, and an extremely tight labour market. Australia is experiencing historically low unemployment and underemployment rates and – for the first time recorded – fewer unemployed people than advertised job vacancies nationally.
“For a typical housing mortgage of $500,000, today’s increase of 0.5% will add $2,500 in annual interest payments, or $208 per month. The cumulative increase of 2.25% so far this year will have added $11,250 in annual interest payments, or $937 per month in additional interest payments.
“Today’s announcement is likely to continue the surge of Australians exploring their refinancing options, as mortgage-holders seek out discounts and cheaper options for their home loans from their existing lender or new sources. Even before this latest cash rate rise, PEXA’s Refinance Index had already hit a record high in the week ending 4 September. A clear correlation is evident between this year’s interest rate rises and mortgage refinancing activity, indicating that households are responding directly and proactively.”
PEXA’s Refinance Index key highlights:
a record high of 178.6 points was seen in the week ending 4 Sep 2022 (seasonally adjusted)
the national refinancing index was up by 3.7% m/m and 12% y/y in the week ending 4 Sep 2022
QLD led the country for volume growth, with the QLD seasonally adjusted volume index reaching 227.0.
For more information, visit PEXA’s data & insights hub.