THE PREDICTION THAT WILL CHILL EVERY AUSSIE WITH A HOME LOAN: EVERY BIG MAJOR BANK...
0The prediction that will chill every Aussie with a home loan: EVERY big major bank predicts four or five interest rate rises in the next SIX MONTHS
All of Australia's major lenders are predicting a series of interest rate rises over the next six months that will leave anyone paying off a mortgage hundreds of dollars out of pocket each month. The big four banks are now certain that from June 7. after the federal election. the Reserve Bank of Australia will start to hike interest rates from a record low of 0.1 per cent. Westpac and the Commonwealth Bank have both forecast five rate rises before the end of the year while NAB and ANZ are predicting four rises. The unanimous consensus comes after more than a decade without an interest rate increase. with the last hike coming in November 2010. +3 View gallery All of Australia's major lenders are predicting a series of interest rate rises over the next six months that will leave anyone paying off a mortgage hundreds of dollars out of pocket each month Major banks all tip pain starting in June • COMMONWEALTH: Reserve Bank rate rises to start in June. Cash rate to reach 1.25 per cent by February 2023 • WESTPAC: increases to start in June. Cash rate to reach 2 per cent by June 2023 • NAB: first move in June. Cash rate to reach 2.25 per cent by August 2024 • ANZ: hikes to start in June. Cash rate to reach 2 per cent by November 2023 and peak above 3 per cent. but not until sometime after 2023 Source: RateCity Advertisement 'There will be quite a considerable amount of economic pain. especially if you bought recently. It will hurt a lot.' Geoff Kingston from Macquarie University's Centre for Risk Analytics told Daily Mail Australia. 'House prices in places like Sydney are already falling to some extent and the rate hikes will accelerate that process even more.' The economist said not only will you be paying more. but you may find if you try to sell your home it will be worth less. 'Some may even have to sell up. I wouldn't want to put a figure on it. But certainly there will be foreclosures.' he said. Huge stimulus payments during the Covid crisis both in Australia and across the globe. have driven up the cost of goods and services. Headline inflation last year increased in Australia by 3.5 per cent. a level well above the RBA's 2 to 3 per cent target. and that was before Russia invaded Ukraine. Now RBA Governor Philip Lowe is expecting cost of living pressures to worsen further as the European conflict keeps oil prices high during a time of east coast floods. 'Ongoing supply side problems. Russia's invasion of Ukraine and strong demand as economies recover from the pandemic are all contributing to the upward pressure on prices.' he said in the latest monetary policy decision. +3 View gallery The big four banks are now certain that from June 7. after the federal election. the Reserve Bank of Australia will start to hike interest rates which currently sit at the record low level of 0.1 per cent 'Rising prices are putting pressure on household budgets and the floods are causing hardship for many communities.' The soaring cost of living crunch means the RBA has no choice but to raise interest rates. or the problem will get much worse. Westpac predicts five rate rises in 2022 that would increase typical mortgage repayments by $363 by Christmas. followed by three more increases next year that would add $616 a month to existing servicing costs by mid 2023. Should Westpac's prediction come true. a borrower with a 20 per cent mortgage deposit buying a median priced Australian home worth $738.975. based on CoreLogic data. would start paying $363 a month more in repayments by Melbourne Cup Day in November. Under an existing 2.29 per cent variable rate. this borrower with a $591.180 mortgage would now be paying $2.272 a month. Should that 1.15 percentage point increase from the RBA be passed on in full. a rise in variable rates to 3.44 per cent would see monthly repayments increase to $2.635. More rate increases in 2023 would add 1.9 percentage points to the existing cash rate. and if passed on in full would take...
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