ANZ has updated its interest rate forecast and is expecting the Reserve Bank of Australia (RBA) to hike rates by 0.40 per cent, to 0.75 per cent.
ANZ updated its prediction after yesterday’s national accounts data, which showed Aussies’ wages were rising.
The data showed a sharp increase in average hourly wages - prompting the major bank to assume the RBA would hike by more than anticipated to bring inflation back under control.
After the sharp acceleration in average hourly wages in Australia's #GDP report today, we expect the #RBA to lift the cash rate by 40bp at its June meeting. #ausecon #auspol @felicity_emmett pic.twitter.com/nxYlM47xRt
— ANZ_Research (@ANZ_Research) June 1, 2022
Rate rise impacts on mortgage holders
The RBA hiked the cash rate for the first time in 12 years at its May meeting, in response to a surprising lift in inflation.
A further hike is expected on June 7, when the RBA board meets again.
After the May hike, RateCity data found monthly repayments for someone on the average variable rate of 2.92 per cent over 25 years would rise by:
$500,000 loan - $65 a month
$750,000 loan - $98 a month
$1 million loan - $130 a month
“The RBA is likely to lift the cash rate multiple times over the next six to 12 months as it works to bring inflation back under control,” RateCity research director Sally Tindall said.
“If the cash rate gets to 2 per cent by May next year, then someone with $500,000 owing on their loan today and 25 years remaining could be looking at a total increase to their monthly repayments of $511.
“That’s going to be a lot for many borrowers to swallow, particularly anyone already struggling to make the monthly budget add up.”
How to calculate your new mortgage repayments
There are a number of home loan calculators available to help you understand exactly how much your personal situation might change.
Here are some calculators you can use: