After a one-month reprieve, mortgage holders are starting the new year with yet another interest rate rise.

The Reserve Bank of Australia (RBA) increased the cash rate a further 25 basis points at its February meeting, bringing the cash rate to an 11-year high of 3.35 per cent. Read the official statement on the RBA’s website.

The RBA was left with little choice but to raise rates today after Australia’s inflation rate unexpectedly rose 1.9 per cent in the fourth quarter of 2022.

“Annually, the Consumer Price Index (CPI)  rose 7.8 per cent, with new dwellings (+17.8 per cent), domestic holiday travel and accommodation (+19.8 per cent) and automotive fuel (+13.2 per cent) the most significant contributors,” ABS head of prices statistics Michelle Marquardt said. 

Treasurer Jim Chalmers said the CPI was “unacceptably high” and reiterated inflation as a “defining challenge” for 2023.

“We are realistic about the extreme price pressures that Australians are facing right now, the impact of interest rates hikes, and the costs and consequences of a war in Europe and a period of substantial volatility in the global economy as well,” he said. 

Today’s rate hike equates to a $76 increase to monthly repayments for the average borrower with a $500,000 loan. Since the start of the rake hikes in May last year, that same borrower has seen their monthly repayments increase by a total of nearly $1000. 

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