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

How Digital Finance is Transforming Car Purchases in Australia

02 Apr 2026: Paige Estritori

The landscape of car purchasing in Australia is undergoing a significant transformation, driven by the rapid adoption of digital finance solutions. Traditional methods of securing car loans are being replaced by streamlined online processes, offering consumers faster approvals and enhanced convenience. - read more

ASIC Calls for Strengthened Consumer Protections in Car Finance

02 Apr 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 raise concerns about responsible lending practices. The findings indicate that some consumers are being subjected to exorbitant fees and are defaulting on their loans shortly after approval. - read more

Why Australians Are Turning to Novated Leasing in a High-Interest Market

02 Apr 2026: Paige Estritori

In the current economic climate, characterized by elevated interest rates and high vehicle prices, Australians are increasingly exploring alternative methods of financing their car purchases. One such method gaining popularity is novated leasing, which offers a cost-effective and tax-efficient alternative to traditional car loans. - read more

ASIC Calls for Improved Consumer Safeguards in Car Finance Sector

25 Mar 2026: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has conducted a comprehensive review of the 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

Australian Car Buyers Increasingly Postpone Finance Decisions

25 Mar 2026: Paige Estritori

Recent research indicates a growing trend among Australian car buyers to delay decisions regarding vehicle financing. A study conducted by carsales reveals that only 71% of buyers have determined their financing method before commencing their vehicle search, a decrease from 77% in previous years. - 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 ...