Well, mortgage borrowers should brace for more interest rate hikes.
But just how many RBA increases are coming have economists divided.
ANZ now predicts the cash rate will peak at 3.60 per cent in May next year, instead of 3.35 per cent by the end of this year.
It also noted the RBA’s decision to reduce the pace of the hikes increases the risk that more hikes will be needed in total.
While Westpac still believes the cash rate will hit 3.60 per cent, it has pushed back the peak until March next year.
NAB has kept its 3.10 per cent peak but has pushed it back from November to February 2023.
CBA’s cash rate outlook remains unchanged, forecasting the peak at 2.85 per cent next month.
Big four bank cash rate forecasts
- CBA: +0.25% in Nov, peaking at 2.85%. Two 0.25% cuts in Aug and Nov 2023.
- Westpac: +0.25% in Nov, peaking at 3.60% in March 2023. Four 0.25% cuts in 2024.
- NAB: +0.25% in Nov, peaking at 3.10% in Feb.
- ANZ: +0.25% in Nov, peaking at 3.60% in May. Two 0.25% cuts in 2024.
How much could monthly repayments rise in total if these forecasts are realised?
Research Director for RateCity.com.au, Ms Sally Tindall said “there could still potentially be four more standard RBA hikes ahead of us.”
Analysis from RateCity.com.au shows the average borrower’s monthly repayments could rise in total by between $760 - $983, based on the big four banks’ cash rate forecasts.
Loan sizes are based on a borrower’s debt at the start of the hikes, calculating the total increase from 1 May to each peak.
Ms Tindall further commented:
“Make certain you’re ready for these hikes by checking what your monthly repayments will be if your rate rose by another 1 per cent after this hike.
If you can, put your budget to the test by making these higher repayments now to see how it holds up.
If the numbers don’t add up, start making changes today. Open your banking app up and look at where your money is going.
Start by targeting the big expenses because that’s often where the biggest savings can be found.
That doesn’t necessarily mean giving up your much-loved takeaway coffee – renegotiating your most expensive bills is likely to save you a lot more money each month.
For people who haven’t had a decent pay increase in a while, now is the time to talk to your boss. Unemployment is around the lowest rate in nearly half a century – this might help you negotiate.
If you’re worried about affording your home loan, call your bank before you miss a payment, to see what options you have."
Steps you can take to help pay the mortgage:
- Make budget cuts: look at your bank account and see where you’re spending the most money to see if you can make cutbacks.
- Refinance your mortgage: it’s the biggest monthly expense for many families so get yourself a better deal. Switching to a lower rate could save you hundreds of dollars each month.
- Review your other bills: Put your other bills under the microscope to see where you can save, such as your energy, phone and internet packages.
- Push for a pay rise: If you haven’t had a decent wage increase recently, now is the time to ask your boss for a pay rise.
- Ask for help early: Before you miss a mortgage repayment, call your bank to see what options you have. You can also call a financial counsellor for advice.
