The bank has lifted official interest rates at its past 10 board meetings,taking the cash rate from 0.1 per cent at the start of last May to 3.6 per cent. Markets,until recent turmoil across the European and Americanbanking systems,had expected the bank to keep lifting the cash rate to 4.1 per cent.
On an average mortgage of $604,000,the rate rises so far have increased monthly repayments by more than $1100.
But during the COVID-19 pandemic,a record number of Australians fixed their mortgages at ultra-low rates. The RBA estimates almost 600,000 fixed mortgages rolled off their low rates last year and another 880,000 are due to roll off this year,with 450,000 more due in 2024.
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Kent said ordinarily the increases in interest rates would feed more quickly into the economy due to the high proportion of borrowers with variable-rate mortgages.
The surge in fixed-rate mortgages through COVID-19 meant the impact,on inflation and the broader economy,would be slowed.
“The lagged effect of the cash flow channel of monetary policy is likely to be somewhat elongated currently due to the high proportion of fixed-rate loans and sizeable buffers held by many borrowers,” he said.