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  • Writer's pictureDHM Partners

Rising Interest Rates in 2023


Mildura Finance, Accounting and finance service

As Australians grapple with the ever-changing world of the housing market, one of the biggest challenges homeowners are currently dealing with is rising interest rates and inflation impacting the cost of living.


This trend is undoubtedly making life more difficult for both home buyers and business owners; however, it is something that needs to be monitored to maintain a secure economy.


How are interest rates determined?


Interest rates in Australia are determined by the Reserve Bank of Australia (RBA) and are made after the RBA assesses various factors. These include everything from the current levels of inflation and employment to any other factors that are thought to be impacting the economy.


What will the Reserve Bank of Australia do?


If you look at markets, they are currently pricing a rate increase in the medium term to around 0.5%.


What does rising interest rates mean for Australians?

Higher interest rates mean that loans are more expensive. For people wanting to secure a loan, a rise in interest rates will make this more difficult and for people with existing loans it will increase their loan repayments thus decreasing their ability to spend their money elsewhere.


How will rising interest rates impact the overall economy?


If people don’t have access to the necessary funds to buy homes, the housing market will suffer which has impacts on the wider economy.


Additionally, as loan repayments increase and household disposable income falls, generally, people will begin to spend less on luxury items.


These factors could lead to an increase in unemployment and a general slowdown in the rate of economic growth.


Are there any positives?


The Australian economy is continuing to do relatively well compared to other nations and a slight rise in the interest rate could help ensure this continues in the future.


How should I prepare?


By monitoring the current economic situation in Australia and being aware of any changes to the cash rate, Australian’s can ensure that they are best prepared to handle the changing market.


  • Households

    • Assess your ability to pay your loans factoring in the increase in interest rates

    • Consider restructuring or refinancing your borrowings to products with lower interest rates.

    • Consider paying down debt with higher interest rates if your circumstances allow

    • Talk to your broke or lender about re-pricing your existing loans compared to refinancing.


  • Businesses

    • Assess your ability to pay your loans factoring in the increase in interest rates

    • Consider the overall cost of your banking and assess if there are any unused facilities incurring unnecessary costs.

    • Consider where you can make savings to your transactions or trade banking costs.

    • You can discuss large purchases with your accountant so they can assist with tax implications and determine your serviceability of loans.

    • Give your bank your accountants contact details as they will work closely with the bank to help you secure finance


It’s important to remember that any major decisions related to your financial situation should be discussed with your DHM Partners Advisor


Get in touch with your trusted Mildura Accountants:


Trusted Business Advisors, DHM Partners


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