The Reserve Bank of Australia (RBA) has made its first ever consecutive 50 basis-point monthly interest-rate increase as its Board intensifies its efforts to rein in inflation.
Following a 50-basis point rise in June – the largest since the year 2000 – the RBA has once again lifted the cash rate by 50-basis points, to 1.35%.
Philip Lowe, Governor of the Reserve Bank of Australia, said global inflation is high due to a variety of factors, including the war in Ukraine and COVID-related disruptions to supply chains. However, he said it wasn’t as high in Australia as it is in other locations.
“Inflation in Australia is also high, but not as high as it is in many other countries,” Mr Lowe said. “Global factors account for much of the increase in inflation in Australia, but domestic factors are also playing a role.
“Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices. The floods are also affecting some prices.”
He added that inflation is expected to peak later this year, but decline back towards the 2-3% range in 2023.
This is the first-ever consecutive cash rate increase of 50 basis points or more in Australian history, and means the cash rate has risen by 125 basis points in just three months.
However, despite the impact this will undoubtedly have on consumer confidence and worsening household cost of living pressures, Compare the Market’s banking expert David Ruddiman said the 50-basis point increase was inadequate given the circumstances.
“Our cash rate of 1.35% is still too low given inflation is sitting at 5.1% and is heading toward a peak of around 7% before the end of the year. This really means the cash rate needs to climb to above 3.5%, stay there for a sustained period to bring inflation back to the Reserve Bank’s target,” Mr Ruddiman said.
“There’s now a real likelihood of an additional 50-basis-point hike in August.”
Compare home loans with Compare the MarketHouseholds are already experiencing double-digit increases in their power bills, unemployment is at record lows and labour costs are pushing higher, and Australia’s supermarkets are likely to implement sweeping price increases in the weeks ahead as a response to requests from suppliers.
“Our recent analysis suggests the Australian economy will be able to absorb higher interest rates in the near-term, with data from the Reserve Bank revealing that many Australian mortgage holders are well-placed to wear further interest rate rises,” Mr Ruddiman said.
The RBA’s April Financial Stability Review revealed many Australian households had channelled savings into mortgage offset and redraw accounts during the pandemic. This has resulted in homeowners with variable-rate loans having a median 21-month buffer on scheduled repayments in February this year, compared to 10 months’ worth at the start of the pandemic.
However, at the current trajectory of rate rises homeowners are likely to face mortgage rates near 5.5% in a little over a year.
“While households that have a decent buffer should be able to ride out these rate rises, those finding it more challenging to balance the monthly household budget, particularly those on a variable mortgage rate, should start preparing themselves now,” Mr Ruddiman said. “This is not the end of rising rates. There’s more pain to come for Australian households with a real likelihood of an additional 50-basis-point hike in August.
“Don’t get sucked in by the sugar hit of some offers on the market. It’s vitally important to check that the interest rate is competitive first.
“Reviewing your home loan, energy and gas bills, home, car and health insurance premiums, to see where you can make cutbacks, or potentially switch to a more competitive deal.”
For those on a variable rate home loan, here’s what a 50-basis point increase in the cash rate, if passed on by the lender in full, will add to your monthly repayments:
| Mortgage size | Increase in average monthly repayments | |
| 50-basis point increase to 3.50% p.a. | Increase at a 2.5% cash rate (4.65% p.a.) | |
| $500,000 | +$137 | +$470 |
| $600,000 | +$165 | +$564 |
| $750,000 | +$206 | +$705 |
| $900,000 | +$247 | +$846 |
| $1,000,000 | +$274 | +$940 |
| Reserve Bank Lenders’ Interest Rates. Monthly repayments do not include any reduction in the mortgage balance over time. These calculations assume: An owner-occupied variable interest rate of 3.00% p.a; principal and interest (P&I) repayments); cash rate increases are passed on in full; the loan term is 30 years and there are no monthly fees. | ||
“Hundreds of billions of fixed rate mortgages are also starting to mature, so those borrowers will find themselves transitioning from an interest rate environment around 2% to north of 5% on variable rates. So, there is no time like the present for those with a mortgage to consider refinancing to a more competitive interest rate,” Mr Ruddiman said.
As we did in both May and June, Compare the Market is tracking interest rate movements from some of Australia’s biggest banks and lenders.
Following both of the previous two cash rate increases, these lenders were quick to pass on the full hike to their customers. Will they do the same again this time?
Watch this space to find out.
All banks and lenders may not be included in this list. We’ve included the lenders on our panel.
The information on this page is general only – check with your lender for further details on their interest changes and how you might be affected.
This page was last updated 12 July 2022.
Compare home loans with Compare the MarketBig four bank rate rises
ANZ rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 15 July
Other info: ” To help customers reach their savings goals and provide certainty of higher fixed returns, ANZ will offer a new competitive rate for its 11-month Advance Notice term deposit of 2.50%pa effective 11 July 2022,” ANZ said in a statement. “ANZ will also increase the bonus interest rate on Progress Saver accounts by 0.50%pa, and will increase the interest rate on ANZ Plus accounts by 0.50%pa to 2.00%pa, with both changes effective from 15 July.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Commonwealth Bank rate rise
Rate hike: 50 basis points.
Customers affected: Variable rate customers
Effective from: 15 July
Other info: CBA will also increase the interest rates for select savings products.
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
NAB rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 15 July
Other info: “NAB has today announced changes across its savings accounts and variable home loans,” NAB said in a statement. “The standard variable home loan interest rate will increase by 0.50% p.a, NAB’s Reward Saver account will increase by 0.50% p.a and NAB’s 12-month Term Deposit account will increase to 2.50% p.a. effective from 15 July 2022.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Westpac rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 20 July
Other info: “Westpac will also increase the standard variable base rate for Westpac Life savings customers by 0.50% p.a. from 22 July, bringing the total variable interest rate to 1.35% p.a,” Westpac said in a statement. “Customers will be able to access a new Term Deposit offer of 2.50% p.a. for terms between 12 to 23 months from 8 July.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
AMP rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 15 July
Other info: “Changes to the RBA cash rate is one of many factors that impacts our pricing decisions, however, there are other factors that we consider such as the Australian economy, market conditions, cost to lend and the competitor landscape,” AMP said in a statement. “This helps us to assess and to continue to offer competitive rates to our customers.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
AFG Home Loans rate rise
Rate hike: TBD
Customers affected: TBD
Effective from: TBD
Other info: TBD
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Bank of Melbourne rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 20 July
Other info: “Following the Reserve Bank of Australia (RBA’s) decision to increase the official cash rate, Bank of Melbourne today announced a 0.50% per annum (p.a.) increase to our variable home loan interest rates, for new and existing home loans,” Bank of Melbourne said on Thursday.
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Bank SA rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 20 July
Other info: “Following the Reserve Bank of Australia (RBA’s) decision to increase the official cash rate, BankSA today announced a 0.50% per annum (p.a.) increase to our variable home loan interest rates, for new and existing home loans,” Bank SA said on Thursday. “These variable rate changes will come into effect on Wednesday 20 July 2022.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Bankwest rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 15 July
Other info: “Bankwest will also increase the standard variable interest rate for select savings products, including an increase to our Easy Saver product by 0.50% to 1.35% p.a. for balances up to $50k,” Bankwest said in a statement.
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Bendigo & Adelaide Bank rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 15 July
Other info: “For Bendigo and Adelaide Bank home loan customers on a Variable Rate Loan the interest rate will increase by 0.50% p.a. as of 15 July,” Bendigo & Adelaide Bank said in a statement . “The Bank will also increase the interest rate on many of its deposit products including an increase to the rate on its Reward Saver account by 0.60% p.a. as of 27 July.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
BOQ rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 8 July
Other info: TBD
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
HSBC rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 25 July
Other info: “We’ve identified a scam around fake Fixed Term Deposits being offered to some HSBC customers,” HSBC said on its website. “This offer is not affiliated with HSBC in any way. Be careful opening email links or disclosing your information to people you don’t know.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
ING rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 12 July
Other info: “ING Australia announces it will increase its highest ongoing variable savings interest rate by 0.50% per annum. This move means eligible new and existing Savings Maximiser customers could earn a variable interest of rate of 2.60% per annum to help boost their savings,” ING said in a statement. “There will also be rate increases across ING Australia’s Savings Accelerator offerings (for new and existing customers) including a 0.50% per annum increase for balances of $50,000 or more.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Macquarie rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 14 July
Other info: “Macquarie’s transaction account interest rate will increase to 1.75% p.a. on balances up to $250,000. This follows Macquarie’s decision in June to increase the interest rate customers earn on their transaction account to be the same as its ongoing high interest savings account,” Macquarie said in a statement. “Macquarie’s transaction account has no minimum balance or deposit requirements, no transaction conditions, and no need to lock money away for a set period to receive the interest rate.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
ME rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 9 July
Other info: “We’re also increasing our popular Online Savings Account by 0.50% (p.a.), which will provide another boost for our savers after the increases we’ve made over the past two months,” ME Bank CEO Martine Jager said in a statement.
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
St. George rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 20 July
Other info: “Following the Reserve Bank of Australia (RBA’s) decision to increase the official cash rate, St.George today announced a 0.50% per annum (p.a.) increase to our variable home loan interest rates, for new and existing home loans,” St. George said on Thursday. “These variable rate changes will come into effect on Wednesday 20 July 2022.”
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
Virgin Money rate rise
Rate hike: 50 basis points
Customers affected: Variable rate customers
Effective from: 9 July
Other info: “To support savings customers, Virgin Money will also lift rates on its popular online savings accounts, the Boost Saver Account and the Grow Saver Account from 15 July, with Lock Saver rates that will help customers smash their savings goals sooner,” Virgin Money said in a statement.
Previous rate rises:
- May 2022: 25 basis points
- June 2022: 50 basis points
