Higher inflation makes it more likely that variable rate mortgage holders will see minimum repayments rise, possibly as soon as the next meeting of the Reserve Bank of Australia in early August.
That may have put paid to any prospect of a cut in interest rates this year and could even prompt the central bank to increase the cash rate on August 6. For an owner-occupier with a $1 million mortgage at the start of the interest rate rising cycle in early May 2022 with 25 years remaining on the mortgage, two more 0.25 percentage point increases would add $300 to monthly mortgage repayments.
“Paying the extra money now will help build a buffer in your mortgage and reduce your interest bill,” she says. “A mortgage rate that starts with a ‘5’ will put you in good stead.”
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