The Santa present we want to re-gift...RBA announces 8th consecutive increase in rates

It is the Christmas present we expected but did not want. The Reserve Bank has today 'gifted' Australians with another increase in the official cash rate at this afternoon's meeting.

In the last meeting of the year, the RBA announced an increase in the cash rate by 0.25% to 3.10%. It argued that inflation is still too high. It continues to focus on using increases in the cash rate to impact upon supply and demand in the Australian economy.

It is the 8th consecutive month that the RBA has increased the official cash rate. It is relying upon data it receives regarding inflation, employment and the economy in the preceeding months to make its rate hike decisions.

The Reserve Bank does not meet again until February 2023, so at the very least home loan customers know that they will not be at the mercy of decisions by the RBA to ring in the New Year. In the meantime, the next few months of economic data will directly determine the RBA's course of action when it does meet.

It is now a waiting game to see how the banks will react to today's announcement. Who will act first? Will all banks increase their variable rates? And will they match the 0.25 increase by the RBA or go by more or less?

It highlights even more how important it is for home loan customers to control what they can by jumping at the opportunity to refinance if a better option is available to them.

This is particularly important for home loan customers who have been in their current loans more than 3 years, who haven't taken advantage of the discounted home loan rates for new customers in recent years.

It may also require home loan customers to become even more discerning when it comes to their expenses. While Christmas is upon us with many 'one-off' expenses, it is the ongoing, regular monthly payments that can add up which eat into the budgets of households.

Home loan customers are being encouraged to work with their brokers to go through their expenses to determine if there are any non-essential expenses which can be somewhat curtailed, especially for those who will now start to really feel the pinch.

A discussion about re-drawable funds and cash back opportunities to refinance can assist home loan customers in determining how best to plan the start to the New Year.

Importantly, it may mean use of some of the down time for home loan customers over the Christmas period to work out a plan of attack that will give their families a strategy for the year ahead.

Your mortgage broker is the person to help you to do this. Take advantage of this opportunity to have them help you.