Australia markets closed

    -50.50 (-0.67%)
  • ASX 200

    -52.90 (-0.72%)

    -0.0009 (-0.13%)
  • OIL

    -0.20 (-0.25%)
  • GOLD

    -5.40 (-0.30%)

    -200.05 (-0.80%)
  • CMC Crypto 200

    +1.13 (+0.28%)

    -0.0006 (-0.09%)

    -0.0061 (-0.57%)
  • NZX 50

    -12.71 (-0.11%)

    -128.34 (-1.07%)
  • FTSE

    -2.26 (-0.03%)
  • Dow Jones

    -107.29 (-0.31%)
  • DAX

    +39.09 (+0.27%)
  • Hang Seng

    -61.09 (-0.33%)
  • NIKKEI 225

    -448.18 (-1.59%)

CBA, ANZ, NAB, Westpac: Exact day banks say rates will rise

The exterior of Westpac, CBA, ANZ and NAB branches.
CBA, ANZ, NAB and Westpac all believe the RBA will hike rates in June. (Source: Getty)

Economists from the Commonwealth Bank (CBA), ANZ, NAB and Westpac are all predicting rates will rise this year - and it could come sooner than you think.

All four big banks now believe the cash rate will start rising from June 7, with Westpac and NAB the last of the major banks to bring forward their forecasts.

Westpac updated its forecast on the back of the RBA’s monetary policy statement for April.

Westpac’s economic team is now predicting the cash rate hikes will start in June and hit 2 per cent by June 2023.

The bank’s previous forecast had the rate hikes starting in August and reaching 1.75 per cent in February 2024.

NAB also updated its forecast, with the first cash rate hike starting in June (also previously August), while on Tuesday, ANZ’s economic team updated its cash rate forecast, bringing forward the predicted start date by three months to June.

All four big bank forecasts have the cash rate hikes finishing at different points.

CBA believes the neutral cash rate will be 1.25 per cent, whereas ANZ has said the cash rate will rise above 3 per cent, but not until after 2023.

How high will the cash rate go and when?

  • CBA: hikes to start in June. Cash rate to reach 1.25 per cent by February 2023

  • Westpac: hikes to start in June. Cash rate to reach 2 per cent by June 2023

  • NAB: hikes to start 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

How will it affect mortgage repayments?

If the cash rate reaches 2 per cent by June 2023, as predicted by Westpac, the average owner-occupier with a $500,000 debt and 25 years remaining, could see their monthly repayments rise by $509, according to data from RateCity.

“To put that into context, that’s like having your car registration come up for renewal every single month,” RateCity research director Sally Tindall, said.

This would equate to a 22 per cent rise in monthly repayments from today to mid next year.

“That’s a steep rise, particularly for people with large loans compared to their income,” Tindall said.

Tindall said Westpac, NAB and ANZ had all brought forward their rate hike schedule on the back of Tuesday’s RBA statement.

“The notable exclusion of Governor Lowe’s ‘prepared to be patient’ mantra has raised alarm bells among economists,” she said.

“Governor Lowe effectively ruled out a hike in May by stipulating he wanted to see further wages data, the next round of which is out mid-May. However, June is a live possibility.”

Tindall said that while June might seem like a while away - mortgage holders needed to prepare themselves now.

“People who think they might struggle to make higher repayments shouldn’t wait until June to see whether the RBA makes its move,” she said.

“Now is the time to start battening down the hatches and building up a buffer.”

What can mortgage holders do before rates rise?

  • Get yourself a rate cut now before the RBA hikes start: Call your bank and haggle. The average variable-rate mortgage holder is paying 0.40 per cent more than a new customer. If your bank doesn’t budge, you could be better off refinancing.

  • Make extra repayments: Paying down as much of your debt now, while your rate is still low, will help soften the blow when rates rise.

  • Prepare your budget: See where you can trim your budget to free up money to help build a buffer.

  • On a fixed rate? Set a reminder for two months before it ends so you can begin shopping around for a new loan. Fixed loans often roll over to higher variable rates unless you do something about it.

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.