The cash rate reprieve appears to be short-lived for variable-rate mortgagees, with the RBA increasing the cash rate by 25 basis points at its May meeting. 

Coincidentally, the last time the cash rate was this high was following the RBA’s May 2012 meeting, then at a rate of 3.75%.

CommBank economists were the lone rangers in anticipating a cash rate increase across the major banks, flagging surging population growth as a key factor. 

CommBank Head of Australian Economics Gareth Aird said the RBA considers the stronger than anticipated lift in population growth to be inflationary.

“The underlying demand for housing has lifted due to much stronger than anticipated population growth,” Mr Aird said. 

“This has had implications for the rental market and by extension dwelling prices. 

“Population growth was forecast by the Commonwealth Government to be 1.4% in 2022/23 (in line with its pre-pandemic average).  But as RBA Governor Lowe noted in his speech on 5 April, it now seems likely that the annual rate of population growth will soon be around 2%.” 

PropTrack Senior Economist Eleanor Creagh noted while a further pause was considered, concerns around inflation expectations remain anchored and the board’s commitment to overcome the challenge of persistently high inflation saw the cash rate increased by 25 basis points.

“The substantial tightening that has been pushed through already saw conditions in the housing market rebalance quickly last year, with prices falling from peak levels in most parts of the country,” Ms Creagh said.

“Prices nationally fell for nine consecutive months but have begun reversing their falling trend this year.”

In the post-meeting statement, RBA Governor Dr Philip Lowe detailed inflation in Australia has passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range. 

“Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today,” Dr Lowe said.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve."


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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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