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Navigating rate rises with Newcastle Permanent

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Greg Hooper is head of customer lending at Newcastle Permanent.

With more than 25 years’ retail banking experience, he has had time to reflect on what has become the RBA’s 10th consecutive hike in 11 months, and what that means to the average Novocastrian’s back-pocket. 

Do you believe there will be more interest rate rises in 2023? 

There’s so much happening in the world right now, and so much is changing from day-to-day it’s really challenging to say.

One thing that’s for sure is that inflation remains above the RBA’s target range, and the RBA has said that reducing inflation remains a key objective. 

After their March meeting, the RBA did provide some reassuring commentary that we’re close to the top of the current rate-increase cycle, but even they don’t know for sure what will happen to influence their decisions during the remainder of 2023. 

Why do banks have to follow the RBA’s lead? 

A range of factors go into how banks set their interest rates including funding costs, competition from other banks for customers, and the broader economic environment. 

When the RBA changes the cash rate, it has impacts across the banking sector as the market adjusts.

For us, this may have some influence on the rates we pay to depositors (ie through your savings account) and charge borrowers (through your loan).

Generally, when the RBA cash rate is higher, across the market, lending and deposit rates will be higher; when the RBA cash rate is lower, lending and deposit rates will be lower. 

What do you suggest for bank members who are struggling to make repayments? 

My advice would be to contact your bank or financial institution as soon as possible so they can work with you to find a solution while you have options.

The worst thing to do is nothing and hope it will be okay because if you leave it too late your options may be less attractive. 

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Greg Hooper, Customer Lending at Newcastle Permanent helps us navigate rate rises.

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