Reserve Bank Raises Official Interest Rates in 2023: Impact on Mortgage Repayments
The Reserve Bank has decided to raise official interest rates for the first time in 2023. Following its initial meeting of the year, the bank increased the cash rate by 0.25 percentage points to 3.85 per cent. This adjustment will lead to an approximate $100 rise in monthly repayments for a $600,000 mortgage. The decision was made unanimously, citing a notable increase in inflation to 3.8 per cent over the 12 months leading up to December and a decrease in unemployment to 4.1 per cent.
While inflation had previously decreased from its peak in late 2022, the bank observed a significant rise in the latter half of the previous year. The board noted that this surge in inflation was partly due to increased capacity pressures in the economy. Consequently, the board anticipates that inflation will continue to exceed the target rate for an extended period.
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