Yahoo Finance Aussie banks agree on RBA rate hike and it might not be the last
Commonwealth Bank, ANZ, Westpac and NAB have made calls about where interest rates are going and it's not great news.
All of Australia’s biggest banks now think there will be a rate hike next month after stubborn inflation rates refused to drop, and it might not be the last of the year.
NAB was the only bank predicting the Reserve Bank would increase the cash rate for the 13th time when they meet again on November 7, but economists from Westpac have now joined Commonwealth Bank and ANZ in predicting Australian borrowers are in for more pain.
So what's driving the backflip?
The Australian Bureau of Statistics announced consumer prices rose 1.2 per cent in the September quarter, with the higher than expected inflation driven by soaring petrol prices, surging power bills and the tight rental market.
The 12 previous interest rate hikes haven't been able to take the edge off inflation and there's another telling sign the RBA will act to try and reach its target of between 2 and 3 per cent by next year.
RBA governor Michele Bullock admitted inflation numbers were higher than the central bank were forecasting and that "surging rental costs and elevated power bills" made the figure harder to get under control when grilled in senate estimates today.
She had previously said the board would "not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation” but stopped short of making a call on a definite rate rise next month.
"We‘re still analysing the numbers at the moment. I wouldn’t like to say more or less likely. We’re still looking at it,” Bullock said.
What are the big four banks predicting for next RBA meeting?
CBA: Hike to 4.35 per cent
NAB: Hike to 4.35 per cent
ANZ: Hike to 4.35 per cent
Westpac: Hike to 4.35 per cent
What would a rate hike mean for borrowers?
Should the RBA hike interest rates at its November meeting, the average borrower with a $500,000 debt at the start of the hikes would see a $76 increase to their monthly mortgage repayments.
On top of the 12 hikes already delivered, RateCity found this would see borrowers’ repayments rise by a total of $1,210.
Loan size | Increase of 0.25% | Total increase across 13 hikes |
$500,000 | $76 | $1,210 |
$750,000 | $114 | $1,815 |
$1 million | $152 | $2,420 |
Borrowers have been warned they should "get their heads around what a 13th rate hike would look like" because it's looking more and more likely - and that it may not be the last.
“Borrowers should prepare for a rate hike in November, but potentially one more in December or the New Year," RateCity research director Sally Tindall said.
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