Today’s monthly interest rate meeting saw the Reserve Bank of Australia raise the current cash rate to 0.85%, returning to its highest level of since September 2019. This shock move also marks the first back-to-back rate rise in 12 years.
In a statement, RBA’s Governor Philip Lowe said “today’s increase in the interest rates by the Board is a further step in the withdrawal of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic”. He also said inflation in Australia has increased significantly and is expected to increase further, foreshadowing further rate rises in the coming months.
Despite rising rates working to the advantage of first home buyers, recent home buyers who have purchased in the last two years, might be affected. Higher mortgage repayments are one blow young Aussie home owners will face, but one of the biggest things to consider is banks will be expected to tighten their lending criteria and standards, giving borrowers a lesser amount to bid at auction.
So, what does this mean for first home buyers trying to get into the housing market? With many first home buyers trying to get into the market in recent years, now might be the time to get their foot in the door. In an article written by news.com.au today, rising interest rates have put the brakes on runaway house prices, which have dropped by 0.11 per cent nationwide in the wake of the Reserve Bank’s drought-breaking cash rate hike in May. With the further interest rate rise, these first home buyers will need to be every bit hopeful that the price growth will ease further.
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