Many people are feeling that Christmas has been ruined, as the Reserve Bank of Australia (RBA) announced on Tuesday that it will raise the cash rate by 25 basis points, bringing it to a level of 3.1 percent – the highest rate since 2012 – for the eighth consecutive time.
The news has come as a major blow to households across the country, who were already struggling with the cost of living and the lack of wage growth. With the increase in interest rates, many people will now find it even harder to keep up with their mortgage repayments or other financial commitments.
The RBA’s decision to raise rates for the eighth time in a row has also caused considerable concern amongst businesses. Small businesses in particular are likely to be hit hard, as the higher interest rates will likely mean higher borrowing costs and a decrease in consumer spending.
The RBA’s decision to hike interest rates has also had a knock-on effect on the stock market, with many companies seeing their share prices drop. This could potentially mean that many investors may be forced to sell their shares, leading to further volatility in the market.
The big banks have started to declare that they will transfer the RBA’s rate increase to their customers with variable rates.
From December 16, NAB will be the first of the big four banks to pass on the full 0.25 per cent rate hike, with variable mortgage holders seeing a 6.67 per cent discounted variable rate, resulting in an additional $78 in monthly repayments for a $500,000 loan.
From December 16, ANZ’s discounted variable rate will reach 5.99 percent, while the index rate will increase to 7.39 percent.
Westpac’s standard variable rate will increase to 6.18 per cent and its standard rate will reach 7.48 per cent starting on December 20.
The Commonwealth Bank (CBA) has declared that its basic rate will now be 4.87%, and its discounted variable rate between 4.82% and 6.49%, effective December 16th due to the rate hike.
