Despite being well below last year’s peak average variable of 9.6 percent, the rate hike may dampen the runaway property markets in Australia’s mortgage belts, according to experts.
Tim Lawless of RP Data said first home buyer demand is already winding back and will be hit hardest by the RBA’s move.
“First home buyers and low income households will feel the rise the most, whereas less price sensitive mortgage holders and prospective buyers will be less affected”, he said.
Some punters however, stand to clean up. The rate hike will lure investors back to the market, as the lack of competition tempers runaway house prices, Mr Lawless said.
All eyes will now turn to the banks, which may look to raise home loan rates in accordance with the RBA’s move.
ANZ was the first of the Big Four to raise its variable rate by 0.25 percent today, just minutes after the RBA’s announcement. Commonwealth Bank was the second to ramp up its variable rate, also by 0.25 percent.
Last month, the RBA raised rates for the first time in 19 months – prompting rate rises from all of the Big Four banks.