RBA Rises Rates Again – How To Prepare For The Future


Yesterday’s 0.25% cash rate rise marks the 7th consecutive month of cash rate rises which is a 2.75% increase since May.

The .25% hike means a variable rate mortgage payment increase of around $74/month on a $500,000 mortgage. This means a total of $760 per month increase since May this year.

The constant rises are putting more strain on households, however spending doesn’t seem to be slowing as much as previously predicted. With inflation still growing at an annual pace that we haven’t seen since 1990, the big 4 banks are predicting more hikes over the coming months before it stabilises in Q2 next year.

Westpac and ANZ are predicting the cash rate to increase to 3.85% in the next 8 months. This would mean a variable interest rate of around 6.5% which could seriously affect people who haven’t refinanced their loans.

However, we are seeing property prices fall giving some relief to people looking to get into the market after the recent explosion in prices due to housing shortages.

Indicators show that inflation will be slowing soon, but the banks are predicting we won’t see rate drops until the second half of 2023.

There is also around $158 billion worth of fixed-rate loans that are set to expire before the end of next year. That means tens of thousands of people who are on great fixed rates right now, compared to the variable rate, will be up for a big interest repayment hike.

How can I make the best of the current financial climate?

  1. Look at refinance options: With the climb of interest rates over the last 6 months, some mortgage deals that looked great at the time have now turned sour and have been overtaken by better deals and new offerings. If you haven’t refinanced your loan in the last 12 months, it’s definitely worth speaking with a broker to see if you can get a better deal. OneCorp’s in-house mortgage broker can find you a great deal to refinance your loan, plus help to guide you in paying off your mortgage faster using investment properties.
  1. Take stock of your current mortgage payments and look at what another 1% interest rate increase would do to your monthly repayments. It may be worth putting some extra aside to help cope with a temporary interest rate rise before we reverse inflation growth and see some relief in rate decreases.
  1. Look for opportunities to invest and make the most of the next 12-24 months. Australia still has a big housing shortage and with lingering supply chain issues still recovering from lockdowns, there won’t significant relief for years. This can provide an opportunity for increased cash flow from investment properties.

Many people are asking: Should I wait for interest rates to cool off before buying an investment property?

The short answer is: No.

Investing in property with the right strategies means you can get good returns in nearly any financial season.

With OneCorp, we take a Numbers-First approach to investing. This means that we take a look at your financial situation and your investment goals together and explore different strategies and options available to your specific circumstances. We then look for a great property investment opportunity that enables you to maximise your cashflow, equity growth and tax advantages while minimising your investment risk.

To learn more about how we can help you take advantage of the current market conditions, book a free strategy session with OneCorp today.

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