RBA interest rate rise catches markets, banks and borrowers by surprise
The Reserve Bank of Australia (RBA) has shocked borrowers and financial markets by resuming interest rate rises after a one-off pause last month.
It has lifted its cash rate target from 3.6 to 3.85 per cent, marking the 11th increase in the space of a year.Official interest rates have not been at this level, or higher, since they were cut to 3.75 per cent in May 2012. The move caught most traders by surprise, with the market only pricing in a 13 per cent chance of rates rising ahead of the RBA's announcement.
The housing market has started this year on a stronger footing and after nine consecutive months of price falls last year, national home prices have been rising since January. Home prices are now up 0.75% from their low recorded in December 2022. Another cash rate increase could encourage homeowners to sell who want to capture market momentum. Winter is typically a quieter time for property listings, and sellers may choose to take advantage of this to maximise their exposure in the market
