Mortgage pressure grows as RBA announces 4.85 cash rate hike today after reserve bank meeting on interest rates in Australia

Rates rise again this year

The Reserve Bank of Australia lifted interest rates for the fifth time this year, bringing the cash rate to 4.85%. The rate is now at its highest level in 18 years.

The decision had been widely expected. Even so, the bank acknowledged that families and businesses would find it difficult to absorb the increase.

Pressure on households

Mortgage holders are likely to feel the effects through repayments. The bank said many borrowers are already managing large payments and described the decision as difficult for Australians with mortgages.

It also noted that households face rising costs for groceries, electricity, insurance and other essentials. High inflation is particularly painful for people on lower incomes, including renters with little or no savings to rely on.

Inflation and global pressures

The bank said household budgets are not driving inflation higher, but that households can still play a helpful role in addressing it. It also linked sustained upward pressure on inflation to the re-escalation of a war that has entered its ninth month. The conflict is weighing on growth, and the bank said its end could not come soon enough for the global economy or Australians facing cost-of-living pressures.