RBA Raises Cash Rate to 4.6% for Fourth Time in 2023, Targeting Inflation

The Reserve Bank of Australia (RBA) has raised the cash rate for the fourth time this year to combat persistent inflation. The new rate is set at 4.6%, up from the previous 4.35%. This move aims to control inflation, which has remained above the target band for over six years.

AMP chief economist Shane Oliver noted that consumers should expect lenders to respond swiftly to the RBA's actions, often adjusting mortgage rates on the same day. As each 0.25% hike translates to an additional $91 in monthly repayments for a $600,000 loan over 25 years, the cumulative effect of the four hikes this year is about $360 more per month, totaling an additional $4,320 annually.

Prospective homebuyers are also feeling the pinch. For individuals earning the average full-time wage of $108,650, their borrowing capacity has declined by over $47,000, while couples sharing this income see a reduction of nearly $95,000.