The new cash rate is 0.85 per cent

The Reserve Bank has increased interest rates for the second month in a row, with a 50-basis-point hike taking the cash rate to 0.85 per cent.

If passed on full by the banks, the rate rise will add $133 a month on a loan worth $500,000 over 25 years, and $265 a month on a loan worth $1 million.

In early May, the RBA lifted Australia’s official cash rate by 25 basis points to 0.35 per cent from 0.1 per cent.

It marked the first rate rise in 11 years – since November 2010 – and forecasts are that the cash rate could hit by 2.5 per cent by the end of next year.

If this happens, a borrower with a $500,000 loan balance could see their monthly repayments rise by $652 a month by Christmas next year.

If you have questions in relation to the above, or any other matters, please do not hesitate to contact our office on 1300 620 345.