Interest rates up another 50 basis points with more hikes to come
Interest rates up another 50 basis points with more hikes to come
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
As was expected, the Reserve Bank of Australia (RBA) raised interest rates by another 50 basis points this month.
The fourth rate hike in as many months, today’s decision takes the cash rate from an emergency low of 0.1% to 1.85%.
Since commencing the tightening cycle back on 5 May 2022, the cash rate has risen by 175 basis points; but despite the rapid hike, the cash rate remains well below the pre-COVID decade average of 2.56%.
The RBA is clearly prioritising fighting inflation over supporting the housing sector and any temporary slowdowns in overall economic activity, as the cash rate approaches a contractionary setting later this year.
If house prices fall and mortgage repayments rise, it might help to limit inflation through wealth effects and may also reduce household spending.
The Reserve Bank of Australia believes that inflation will be back at 2-3% by the end of the year and the cash rate may retreat somewhat through the second half of next year.
The cash rate is forecast to peak at 3.32% in March next year and fall back to 2.99% by the end of 2023.
Today’s rate hike, which is likely to flow through in its entirety to variable mortgage rates within a matter of days, paints a weaker picture for the housing sector.
More rate increases to come
Higher interest rates have already had an immediate downside impact on housing values, with CoreLogic’s combined capital cities index peaking shortly after the first-rate on hike in May.
Since that time, dwelling values across the combined capital cities index are down -2.8% to 1 August, after rising 25.5% through the recent upswing.
According to most bank forecasts, the cash rate could rise at least another 75 basis points before peaking.
With this in mind, the decline in housing values is expected to become steeper and geographically more widespread.
Sydney home values are already falling at the fastest pace since at least the early 1980s, with most of that decline (4.8%) occurring since May’s cash rate increase.
Home prices will be influenced by how quickly interest rates rise and how high they go, as well as the performance of the broader economy, available employment opportunities and demographic trends.
As the cash rate finds a ceiling, housing values should find a floor.
Published:Wednesday, 3rd Aug 2022 Source:
Please Note: If this information affects you, seek advice from a licensed professional.
In October 2025, Australian household spending experienced a notable increase of 1.3%, reaching A$78.4 billion. This marks the most substantial monthly rise in nearly two years, as reported by the Australian Bureau of Statistics. The surge was primarily driven by heightened expenditures on clothing, electronics, and hospitality services, spurred by year-end sales events. - read more
In a proactive move to address potential risks in the housing market, the Australian Prudential Regulation Authority (APRA) has announced a new policy set to take effect in February 2026. This policy will cap the issuance of high debt-to-income (DTI) home loans at 20% of new lending portfolios for authorized institutions. Specifically, loans where the borrower's debt exceeds six times their income will be subject to this limitation. - read more
Recent findings from a national survey conducted by financial comparison site Canstar reveal a concerning trend in Australia's personal debt landscape. While the proportion of Australians holding non-property-related personal debt has decreased, those who do carry such debt are facing higher average amounts. In 2025, the average personal debt has risen to $17,634, up from $15,179 in previous years. - read more
If you are seeking lower rates, lower fees and more flexibility in your home loan. you are in luck! Our national panel of mortgage brokers is looking forward to an opportunity to assist you. Apply online for a free eligibility assessment and one of our broker network refinance specialists will get on the case to track down the best deal for your individual circumstances. Without any obligation and at no charge to you!
Embarking on the journey to secure a personal loan can often seem like navigating through a complex financial landscape. Particularly for Australians, where the market is bustling with a multitude of lenders each with their respective criteria and rates, increasing the chances of loan approval is a pursuit that requires insight and preparation. - read more
Before considering a loan application, it's crucial to have a clear understanding of your current financial position. Start by noting down all sources of income, including salary, any additional earnings, or government benefits. This will give you a comprehensive view of your financial inflows. - read more
A credit score is a numerical representation of your creditworthiness. It's derived from your credit history, which includes the total amount of debt you have, your payment history, and other financial behaviours. - read more
Need Help Finding a Loan?
Find out now if you qualify and compare
rates, offers and options from multiple lenders - without a credit check!
All finance quotes are provided free (via our secure server) and without obligation. We respect
your
privacy.
Knowledgebase
Gross Domestic Product (GDP): The total value of all goods and services produced within a country’s borders in a specific time period.
