Reserve Bank keeps interest rates on hold but many more Australians to soon hit breaking point

The Reserve Bank of Australia held it's meeting on Tuesday (3rd October) - the first chaired by new governor Michele Bullock - and economists and markets were right in widely tipping that it would keep interest rates on hold.

For the time being, millions of home owners are being spared another punishing rate hike, but this is not the end of increasing pain for a growing cohort of Australians.

The central bank has left the door open for further interest rate rises later this year, depending on what happens to inflation over the coming weeks.

Some fear this "higher for longer" interest rate environment that central banks have warned of could mean we soon hit a breaking point.

The strain from interest rate hikes is already starting to show, with RBA data this week confirming that more Australians are being pushed into financial hardship, which could worsen in the coming weeks and months as another 550,000 Australians roll off mortgages and onto higher variable rates.

New data from RBA - released this week under a Freedom of Information request by The Australian newspaper - suggests that more Australians are using credit cards to cover the rising costs of rent, petrol, electricity, gas and insurance.

Following a meeting with helpline representatives, as internal RBA email in July said the agency "reported a significant number of callers experiencing hardship who are accruing additional debts via credit cards, Buy Now Pay Later, borrowing from friends and family, and increasingly unpaid obligations to the ATO, their utilities providers and council rates".

Now would be the time to consider refinancing to a more competitive rate to save on some $$ and the financial stress. Debt consolidation can also alleviate some of the financial stress of having multiple lines of debt.

Brokr can assist with both refinancing and debt consolidation.

Source: ABC News RBA article 

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Written by Chloe Boswell
5 October, 2023
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