Several of Australia's major banks have increased interest rates following a decision from the Reserve Bank to lift the cash rate for the eighth consecutive time.
The change will add about another $75 to the monthly payment on a 25-year, $500,000 mortgage.
Look back on Tuesday's updates and reactions as they happened in our blog.
Key events
Live updates
We'll wrap up our live coverage here
By Jessica Riga
Thank you for joining us today, and a big thank you business reporter Gareth Hutchens for tackling your questions.
You can continue to stay up to date with the latest news here on the ABC News website and on our app.
But for now, goodnight!
Here's which banks have passed on the rate rise
By Jessica Riga
Westpac, NAB and ANZ have all passed on the Reserve Bank's December rate rise.
In the link below, we break down what it means for you.
ANZ passes on rate rise, joins Westpac, NAB
By Jessica Riga
ANZ has become the third big bank to increase interest rates for its variable home loan customers following the RBA's cash rate rise.
"Variable interest rates across ANZ’s Australian home loans will increase by 0.25%pa, effective Friday 16 December," ANZ said in a statement released this afternoon.
Australian households have been 'hit from every direction'
By Bridget Judd
That's according to Indeed's Asia-Pacific economist Callam Pickering, who says Australia's economy remains robust for now.
But he adds it is likely to slow down dramatically next year under the weight of interest rate rises.
"We expect domestic demand to soften in the first half of next year, driven by a slowdown in household spending," he says.
"Australian households have been hit from every direction, with inflation-adjusted wages at an 11-year low, mortgage rates rising and asset prices falling. That's a recipe for an economic slowdown if ever I've seen one."
NAB joins Westpac in passing on rate rise
By Jessica Riga
NAB has joined Westpac in passing on the Reserve Bank's rate rise.
"The standard variable NAB home loan interest rate will increase by 0.25% p.a., effective from 16 December 2022," NAB said in a statement this afternoon.
'Harsh and heavy consequences' from the RBA's eighth straight interest rate hike
By Bridget Judd
If you missed it a little earlier, Treasurer Jim Chalmers says the full impact of rate rises is yet to be felt in the economy.
You can catch up on that update below.
Westpac first of big four banks to pass on rate rise
By Jessica Riga
Westpac has become the first of the big four banks to pass on the Reserve Bank's interest rate rise.
"Following the Reserve Bank of Australia’s decision to increase the cash rate by 0.25%, Westpac has announced a range of interest rate changes for deposit and home loan customers," Westpac said in a statement this afternoon.
The changes are as follows:
For deposit customers:
Westpac Life total variable rate with bonus interest will increase by 0.25% p.a. to 3.75% p.a, effective 16 December.
Under Westpac's Spend&Save offer for 18-29 year olds, eligible customers can earn a total variable rate of 4.35% p.a., an increase of 0.35% p.a., effective 16 December.
For home loan customers:
Home loan variable interest rates will increase by 0.25% p.a. for new and existing customers, effective 20 December.
Let's discuss wage-price inflation
By Jessica Riga
Hi folks, There seem to be no comments from the RBA or others regarding wage-price inflation, which is typically the type of inflation that gets central banks and economists worried. If we don't have a wage-price inflation problem, what exactly is the RBA trying to target by raising rates other than crushing demand for cheap credit? Am I missing something here?
- Perthite
Hi there Perthite, thanks for writing in.
I've thrown your question to business reporter Gareth Hutchens to break it down for us.
Gareth: The RBA has been talking about it, but it's talking about it in a way we're not that used to.
In fact, it should be given credit for how it's talking about it.
This is from RBA governor Phil Lowe's statement today:
"Wages growth is continuing to pick up from the low rates of recent years and a further pick-up is expected due to the tight labour market and higher inflation. Given the importance of avoiding a prices-wages spiral, the Board will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms in the period ahead."
Notice how the governor mentions the "prices-wages" spiral?
That's different from a wage-price spiral. It's an acknowledgement from the governor that this inflation is being driven by prices, not wages.
And he's saying there's a risk that these higher prices will lead to higher wages if workers demand, and are rewarded with, higher wages to match rising prices.
So, the RBA still wants to crush demand and it doesn't want wages rising too much from here. It's just trying to stop the price inflation feeding through to wage inflation by putting a barrier between them.
Rising interest rates means some families will 'struggle through Christmas'
By Bridget Judd
Speaking on ABC News a short time ago, Shadow Treasurer Angus Taylor says today's interest rate decision means some Australian families "will struggle through Christmas".
"And it will get worse in the New Year when the lag flows through. As you know, [there is a] lag because the banks take time to pass them through and secondly because many are moving from flexible rates to fixed rates.
"So, it's a tough time for many Australians. What we wanted to see was a government that honoured its promises, cheaper mortgages, cheaper electricity, lower cost of living, taking responsibility."
Let's go back to that comment from the Treasurer on how we're yet to feel the 'full impact' of the rate rise
By Jessica Riga
Afternoon Briefing host Greg Jennet just asked Treasurer Jim Chalmers if that's a hint at the Reserve Bank to pause.
"I don't second guess the independent Reserve Bank, as you know, they come to these decisions independent of pressure or input from government," Chalmers replied.
"The impact on the economy typically operates with a lag, which is why the Reserve Bank, the Treasury and others expect it to be felt in the main next year."
What impact have interest rate rises had on the housing market?
By Bridget Judd
According to CoreLogic, real estate transaction volumes are down 13.3 per cent on this time last year, with the monthly value of secured finance — mortgages — off nearly 18 per cent since rates started rising in May.
Mortgage borrowers are all but guaranteed at least one month of reprieve from further rate rises over summer, with the RBA board taking its traditional break from scheduled meetings in January.
Interest rates are expected to continue increasing, but 'it is not on a pre-set course'
By Bridget Judd
As the ABC's business reporter Gareth Hutchens notes, more interest rate rises are expected in the new year.
Gareth: The RBA has been explicit about that. It says it depends on how inflation behaves in coming months.
This is from RBA governor Phil Lowe today:
“The Board expects to increase interest rates further over the period ahead, but it is not on a pre-set course. It is closely monitoring the global economy, household spending and wage and price-setting behaviour. The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”
We want to know what's happening inside the real estate industry
By Bridget Judd
Are you buying, selling, or renting, and have come across unethical or misleading practices? Are you a real estate industry insider?
Four Corners is looking into the issue and would love to hear from you.
If you have insights into the industry or experiences you think they should know about, tell them here.
The economy is starting to slow, so when could interest rates ease?
By Bridget Judd
The ABC's senior business correspondent Peter Ryan says most economists see the RBA keeping up the rates pressure to reduce demand in the economy, cut household spending and to ultimately cool inflation.
"But there could be a big price — some households going to the wall, the unemployment rate rising slightly and maybe a hard economic landing or a recession, which is why some economists think the RBA will probably be forced to cut interest rates late next year to avoid that recession scenario," he says.
Reserve Bank 'carrying the can', Shadow Treasurer says
By Bridget Judd
Shadow Treasurer Angus Taylor is speaking now.
He says the federal budget was a "missed opportunity" for the government to lay out a plan to relieve pressures on interest rates and inflation.
"The Reserve Bank is carrying the can, it's carrying a heavy can and it's made clear that because it's doing the work, it's a narrow pathway next year, a very narrow pathway to make sure that we remain with a strong economy and we deal with the inflation pressures Australians have."
RBA officials are considering the potential for some people to lose their homes
By Bridget Judd
At least $275 billion worth of fixed-rate loans with the big four banks will come to an end between July and next December next year.
So what do successive interest rate rises mean for people with fixed-rate mortgages?
The ABC's business reporter Gareth Hutchens says some banks are keeping an eye on the financial situation of customers.
Gareth: It means people with fixed rate mortgages will get an interest rate shock next year when the size of their monthly interest payments jumps significantly higher.
And the larger someone’s mortgage, the bigger their interest rate shock.
RBA officials, and executives at the major banks, are thinking about the potential for some people to lose their homes. In October, the RBA acknowledged its rapid rate hikes could see some households with mortgages falling into arrears, forcing some to sell their homes or enter foreclosure.
It said at this stage, the share of households falling into arrears would probably be low, but there was a risk that could change for the worse.
And last month, NAB chief executive Ross McEwan said his bank was keeping an eye on the financial situation of some customers who might struggle with these rate hikes.
He said between $1 billion and $10 billion of the bank’s $320 billion loan book could be at risk if the cash rate hit 3.6 per cent.
WATCH: RBA lifts interest rates for eighth consecutive month to 3.1 per cent
By Bridget Judd
The ABC's Alicia Barry says there were no real surprises out of today's announcement by the RBA.
"The last decision for the year, and the last one until February next year, so very much in line with expectations," she says.
"I think what really the market and economists are going to be looking at is what Philip Lowe does say in the statement, because this is not a surprise, but the forward guidance that he gives about whether or not they're going to take a pause next or continue to keep pushing.... will be really key."
Mortgage holders will get a reprieve over the holidays, but February and March could bring more rate hikes
By Bridget Judd
That's according to Barrenjoey chief economist Jo Masters, who expects the RBA will increase interest rates again in the new year.
"We expect there'll be some further rate hikes early in 2023, both in February and March, to take the cash rate to 3.6 per cent."
It's a sentiment echoed by Price Waterhouse Coopers chief economist, Amy Auster, who says the RBA is likely to hike rates again next year while inflation remains high.
"Still quite a bit above the RBA's target band of 2% to 3%. The RBA governor has said and repeated many times recently that the RBA is looking for inflation to be in the band over the cycle.
"So that doesn't mean that they need to get inflation below 3% in order for the rate rise cycle to stop, but they do need to see that it is headed in that direction."
Treasurer: Australia is 'hostage' to developments 'over which we have no control'
By Bridget Judd
Jim Chalmers says the economy is expected to soften and growth is expected to slow "as a consequence of higher interest rates as well as the downturn in the global economy".
He adds that while Australia has "a number of things going for us", we're also "hostage to a number of developments over which we have no control".
"Obviously the war in Ukraine is causing havoc on global energy markets. The COVID situation in China is something that we're monitoring closely, given the often consequences for our economy.
"There are some welcome signals out of the US but we're still expecting a substantial tightening of monetary policy there. The UK is obviously in a very difficult position, as is Europe.
"The full impact of these interest rate rises from our own independent central bank are obviously still to be felt. And the magnitude of that impact and the timing of that impact is still in many ways uncertain."
Treasurer says full impact of interest rate rises 'will be felt down the track'
By Bridget Judd
We're hearing from the Treasurer Jim Chalmers now.
Speaking on today's announcement by the RBA, he says interest rate rises are already having "harsh and heavy" consequences for a lot of household budgets.
"But as the RBA has made clear today, we expect the full impact of these rate rises will be felt down the track."
