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ANZ predicts 4 more 0.50% cash rate hikes

·Personal Finance Editor
·3-min read
A person holding $100 notes and the exterior of an ANZ branch.
ANZ has revised its interest rate forecast. (Source: Getty)

ANZ revised its cash rate forecast, predicting there will be four more 0.50 per cent hikes in the next four months, taking the cash rate to 3.35 per cent by November.

This is a significant increase from ANZ’s economic team, which previously forecast the cash rate would not get to over 3 per cent until early 2024.

This comes after Commonwealth Bank (CBA) revised it’s prediction for the official cash rate last week, forecasting it will hit 2.6 per cent by November.

In its July minutes, the Reserve Bank of Australia (RBA) said it was prepared to do what was needed to bring inflation under control.

Big Four banks’ RBA cash rate forecasts:

Month

CBA

Westpac

NAB

ANZ


Aug

+0.50%

+0.50%

+0.50%

+0.50%


Sep

+0.50%

+0.25%

+0.25%

+0.50%


Oct

-

-

-

+0.50%


Nov

+0.25%

+0.25%

+0.25%

+0.50%


Dec

-

-

-

-


Feb-23

-

+0.25%

+0.25%

-


Cash rate

2.60%

2.60%

2.60%

3.35%


Source: RateCity.com.au

Analysis from RateCity.com.au found if the cash rate hit 3.35 per cent by November, as forecast by ANZ, someone with a $500,000 mortgage in May, before the hikes began, could see their monthly repayments rise by $909 in the space of seven months.

For someone with a $1 million mortgage, monthly repayments could rise by a total of $1,818.

Loan size

Repayments April 2022

Repayments Nov 2022

Difference


$500K

$2,335

$3,244

$909


$750K

$3,502

$4,866

$1,363


$1M

$4,670

$6,488

$1,818


Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining. Starting rate is the RBA average existing owner-occupier variable rate of 2.86% in May.

RateCity research director Sally Tindall said while the jury was still out on exactly where the cash rate would land by Christmas, borrowers needed to brace for significantly more rate pain.

“Borrowers knew rate hikes were coming but the size and pace of them has shocked households,” Tindall said.

“Many families are already under the pump with skyrocketing grocery and petrol costs. Hefty increases to mortgage repayments, on top of this, could tip some into the red.

“If you don’t think you’ll be able to make the monthly mortgage repayments in the coming months, take action now.”

How to deal with mortgage repayment rises

  • Don’t panic - keep making your repayments: If you are able to, continue to make your monthly mortgage repayments and take time to see how much of a buffer you have.

  • Haggle for a better rate: If your bank is advertising lower rates on their website for new customers, call them and ask them to match it.

  • Shop around: If your mortgage rate isn’t competitive, you could potentially save thousands by shopping around and refinancing with a lower-cost lender.

  • Tighten your belt: If you are struggling with the higher repayments, see how you can make lifestyle changes so that you spend less every single week. That might be fewer dinners out and fewer takeaway coffees.

  • Review your other bills: Put your regular bills under the microscope to see where you might make changes, 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 chat 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. The National Debt Helpline is: 1800 007 007.

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