Interest rates live updates: Aussies smashed by fifth rate hike of the year

Macquarie Bank has wasted no time in passing on today’s hike to its customers.

It will increase variable home loan rates by 0.25 per cent, as well as the interest paid on transaction and savings accounts by the same amount.

The changes will come into effect on November 19.

“With household budgets already feeling the strain, today’s decision by the RBA will be challenging for many Australians,” Macquarie’s head of personal banking, Ben Perham, said.

“To help our variable home loan customers prepare, we’re again waiting more than two weeks before this latest increase takes effect.

“At the same time, our transaction and savings account customers will see their variable rates increase, with no monthly fees or complex hoops or catches to navigate.

“If you are facing financial hardship or are worried about meeting your home loan repayments, please reach out to our specialist team to understand what financial assistance options may be available.” 

Struggling mortgage holders now face more than $6,000 in extra repayments after the Reserve Bank of Australia delivered yet another interest rate hike.

The central bank agreed to increase the official cash rate by 25 basis points in an attempt to curb inflation at its monetary policy meeting on Tuesday. 

The RBA board was split on its decision, with six members voting to raise rates, while three voted to keep them on hold.

The hike is the fifth for the year and takes the cash rate to an 18-year high of 4.85 per cent, with Treasurer Jim Chalmers labelling the decision as “difficult news” for Australians.

READ THE FULL STORY HERE

Chalmers is facing increasing pressure over his spending after inflation came in hotter-than-expected at 4.3 per cent last week.

The RBA has acknowledged that federal and state government spending was contributing to inflation.

Continuing on in his statement, Chalmers once again put the blame on the war in Iran adding to inflationary pressures.

“Inflation is higher than anyone would like and the conflict in the Middle East is making our existing inflation challenge much worse,” he said.

The treasurer said the government took responsibility for “our part” of the inflation battle.

“We’re helping with the cost of living at the same time as we manage the budget responsibly and address Australia’s long-standing productivity challenge,” he said.

“Budgets aren’t the primary driver of prices in the economy, but responsible economic management plays a helpful role.“

Labor has found $180 billion in savings since coming into government, albeit not net savings.

The government has promised to find some more by the mid-year budget update in December.

Treasurer Jim Chalmers says today’s decision was “difficult news” for Australians.

“Today’s decision was widely expected but that doesn’t make it any easier for Australian families and businesses to absorb,” he said in a statement.

“Australians are already struggling and this will stretch their budgets even further.

“The full impacts of the previous rate rises earlier this year haven’t been fully felt yet and will slow our economy further when they are.”

While today’s decision was expected, the RBA Monetary Policy Board was split on whether to hike.

Six members voted to hand down the increase, while three voted to keep rates on hold.

If you want a silver lining, that probably points to another hike in December appearing quite unlikely.

Alright, it’s almost time for the decision.

Remember, we get the RBA’s decision at 2:30pm (AEDT), as well as its in-depth forecasts in its Statement on Monetary Policy.

We’ll then hear from Treasurer Jim Chalmers at 3:10pm, before RBA Governor Michele Bullock stands up 20 minutes later.

Australian home prices are tipped for their biggest downturn on record as borrowers brace for another interest rate hike.

Commonwealth Bank has downgraded its housing forecasts again, now expecting national dwelling prices to fall about 14 per cent from peak to trough this cycle.

The five-capital city average is forecast to drop about 15 per cent.

Brisbane and Perth face the steepest falls, with CBA predicting prices in both cities will drop 18 per cent from their peaks.

Sydney prices are tipped to slide about 16 per cent, while Melbourne and Adelaide face declines of around 13 per cent.

CBA is expecting another 25-basis-point hike today, before cuts begin next August.

National dwelling prices are forecast to dip 8 per cent across 2026 and another 3 per cent in 2027, before stabilising in the second half of next year.

Prices have already fallen 6.7 per cent nationally since their March peak, while the combined five capitals are down 8.2 per cent.

This is a question that comes up a fair bit: why are mortgage holders punished when surging inflation is driven by high global oil prices, terrible domestic productivity, public demand, and spending by Australians without a mortgage?

As Michele Bullock has been at pains to point out, the RBA has a clear mandate – get inflation between 2-3 per cent – and one blunt tool to achieve it: interest rates.

The fact that mortgage holders get hit so hard by rising rates is a uniquely Australian issue.

In the US, mortgages tend to have 30-year fixed rates. France is similar, while other European markets like the Netherlands offer 10-year fixed terms, and the UK between two and five years.

Australia, on the other hand, is dominated by variable rates, and fixed terms are often only one or two years.

That means an interest rate hike negatively impacts far more Australian households than is the case overseas – although equally it means rate cuts offer a unique benefit to mortgage holders.

But restricting the spending of these homebuyers isn’t the only way higher rates work to limit inflation – central banks all over the world use them to tackle rising costs even with different mortgage norms.

As Bullock has explained in several of her press conferences this year, a rate hike works through different channels, including by encouraging savings over spending, limiting borrowing in other parts of the economy, and reducing asset prices.

There’s also another crucial channel: increasing the value of the Australian dollar.

“According to our research, in fact, the most important channel is the exchange rate channel,” she said after the September rate hike.

“And raising interest rates impacts import prices. It makes imports cheaper, encourages people to spend more on imports rather than domestically produced goods. So it alters the supply-demand equation …

“I understand why the people who are impacted by this very directly in terms of loans feel that they are carrying the burden, but actually, the interest rate increase gets into all sorts of cracks.”

Financial comparison site Finder has done its own survey of economists about today’s decision.

It’s not as emphatic as the Reuters poll, but still clear: of 40 economists surveyed, 30 – or a tidy 75 per cent – expect a hike.

That’s broadly in line with market expectations – there’s a roughly 80 per cent chance of a hike priced in, compared to just 22 per cent on October 20.

Bendigo Bank chief economist David Robertson is in the minority tipping a hold.

“The latest inflation data will make this a very close call, but having already increased rates four times this year, the RBA can pause in November,” he said.

“A split decision is likely, however while markets are clearly pricing in a hike, I would prefer to see a more patient approach given recent jobs and spending data.”

AMP’s Shane Oliver, though, said the central bank’s hands will be tied.

“RBA commentary and guidance has been hawkish, and the higher-than-expected September inflation data, along with ongoing upside risks to inflation, leaves the RBA with little choice but to hike again,” he said.