Interest rates up another 50 basis points with more hikes to come

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Since commencing the tightening cycle back on 5 May 2022, the cash rate has risen by 175 basis points; but despite the rapid hike, the cash rate remains well below the pre-COVID decade average of 2.56%.

The RBA is clearly prioritising fighting inflation over supporting the housing sector and any temporary slowdowns in overall economic activity, as the cash rate approaches a contractionary setting later this year.

If house prices fall and mortgage repayments rise, it might help to limit inflation through wealth effects and may also reduce household spending.

The Reserve Bank of Australia believes that inflation will be back at 2-3% by the end of the year and the cash rate may retreat somewhat through the second half of next year.

The cash rate is forecast to peak at 3.32% in March next year and fall back to 2.99% by the end of 2023.

Today’s rate hike, which is likely to flow through in its entirety to variable mortgage rates within a matter of days, paints a weaker picture for the housing sector.

More rate increases to come

Higher interest rates have already had an immediate downside impact on housing values, with CoreLogic’s combined capital cities index peaking shortly after the first-rate on hike in May.

Since that time, dwelling values across the combined capital cities index are down -2.8% to 1 August, after rising 25.5% through the recent upswing.

According to most bank forecasts, the cash rate could rise at least another 75 basis points before peaking.

With this in mind, the decline in housing values is expected to become steeper and geographically more widespread.

Sydney home values are already falling at the fastest pace since at least the early 1980s, with most of that decline (4.8%) occurring since May’s cash rate increase.

Home prices will be influenced by how quickly interest rates rise and how high they go, as well as the performance of the broader economy, available employment opportunities and demographic trends.

As the cash rate finds a ceiling, housing values should find a floor.

Published:Wednesday, 3rd Aug 2022
Author:

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Finance News

Clear

Electric Vehicles Capture Record 16.4% of Australian New Car Sales

28 May 2026: Paige Estritori

In April 2026, electric vehicles (EVs) achieved a significant milestone in Australia, accounting for 16.4% of all new car sales. This marks a substantial increase from previous years and underscores a growing shift towards sustainable transportation options among Australian consumers. - read more

Australian Government Announces Reduction in EV Tax Incentives from 2027

28 May 2026: Paige Estritori

The Australian government has announced plans to gradually reduce tax exemptions for electric vehicles (EVs) starting in April 2027. This decision comes in response to the escalating costs associated with the current incentive scheme, which have significantly exceeded initial projections. - read more

Surge in Electric Vehicle Loans as Australians Respond to Fuel Price Hikes

12 May 2026: Paige Estritori

In March 2026, Australia witnessed a substantial increase in electric vehicle (EV) loan applications, with CommBank reporting a 161% rise compared to February. This surge is largely attributed to escalating fuel prices and growing concerns over energy security, prompting consumers to seek more sustainable and cost-effective transportation options. - read more

ASIC Calls for Strengthened Consumer Protections in Car Finance Sector

12 May 2026: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has conducted a comprehensive review of the nation's motor vehicle finance sector, uncovering significant issues that adversely affect consumers. This investigation was initiated in response to a surge in complaints regarding high costs associated with car financing. - read more

Chinese Car Brands Roll Out Competitive EOFY Deals in Australia

12 May 2026: Paige Estritori

As the end of the financial year (EOFY) approaches, Chinese automotive brands are intensifying their efforts to capture the Australian market by offering a range of compelling incentives on electric and hybrid vehicles. These promotions are designed to attract both private buyers and commercial operators seeking cost-effective and environmentally friendly transportation solutions. - read more

Click for more Finance News

Time to Refinance?

If you are seeking lower rates, lower fees and more flexibility in your home loan. you are in luck! Our national panel of mortgage brokers is looking forward to an opportunity to assist you. Apply online for a free eligibility assessment and one of our broker network refinance specialists will get on the case to track down the best deal for your individual circumstances. Without any obligation and at no charge to you!

... start here ...