Heather Moore provided her expertise to Channel 9 following Melbourne Cup Day Interest Rate hikes
Australia’s new Reserve Bank Governor made a decision that many hoped wouldn’t come, following four months of no interest rate rises. Melbourne Cup Day wasn’t all about celebrating this year, with many Australians disappointed at the 0.25 point rate rise announced on Tuesday 7th November.
Heather Moore, Knight Group Head of Accounting, loaned her expertise to the Channel 9 News Team on Tuesday to answer a question on many mortgage holders’ lips; “What does this mean for me?”
With the cash rate now sitting at 4.35%, Heather provided some solid insight regarding what this may mean for you. “For every $100,000 borrowed, mortgage holders will pay an additional $15 per month in most cases. While this seems minimal, it’s a tough pill to swallow given the series of rate rises we have seen over the last 18 months.” For Australians who had made an effort to “get ahead” on their mortgage repayments, they may now be staring down the barrel of an unchanged repayment period.
Heather commented on the assertion that some financial experts deemed this latest hike wasn’t necessary, with concerns that it may lead Australia closer to recession than recovery; “The statement that came out from the Governor today did show some positives – we have passed the peak of inflation which is good news. It’s now about the timeframe the RBA has in terms of reaching the 2-3% target inflation rate. They now predict that this will take longer.”
Heather further explained, “The four-month break from rate increases has given the RBA enough data to plan the next step. They were surprised by some of the October data regarding house prices and wage growth.”
While the rate increase will undoubtedly have an immediate impact on Australian borrowers, the economic predictions are looking good. “There was plenty of commentary in June of this year, predicting Australia had a 50/50 chance of recession. Following November 7th’s hike, analysts are predicting a 1 in 3 chance at this stage which is a good sign.”
At the end of the day, Australian mortgage holders need to remain vigilant. Knight advises that Australians continue to keep an eye on their spending and consider alternative mortgage options or to “shop around for a better deal.”
Knight Group is with you every step of the way. If this week’s news has you feeling uncertain or nervous, reach out for a consultation today to plan your next step.