Yahoo Finance CBA’s shocking interest rate call could cost Aussies $2,422
CBA is expecting the RBA to hold the official interest rate steady next week.
For Aussies hoping that easing inflation means an end to interest rate hikes, the Commonwealth Bank (CBA) is predicting the Reserve Bank (RBA) will keep rates on hold next week.
But don’t rejoice too soon. Despite anticipating a hold in July, the CBA is also expecting another hike to come in August. On the bright side, CBA said the August hike should be the last.
“The risks of a rate hike in July have ebbed and flowed with the local economic data over recent weeks,” CBA senior economist Belinda Allen said.
“We attach a 60 per cent probability of an on-hold decision at the July RBA board meeting, with a 40 per cent chance of a 25bp [basis point] hike.”
Also read: Another RBA interest rate hike ‘not off the cards’
Also read: Rate hikes must end as inflation free-fall continues
Also read: Why more Aussies in jobs could be bad news for interest rates
What would another hike cost?
For Aussies already struggling with rising mortgage repayments, news of yet another interest rate hike will not be welcome.
RateCity.com.au analysis found another 0.25 per cent rise would mean the average borrower with a $500,000 loan at the start of the hikes could soon be paying a total of $1,211 more a month. That’s a 52 per cent increase.
Loan size | 0.25% increase to 4.35% | Total increase May 22-July 23 |
$500,000 | $77 | $1,211 |
$750,000 | $115 | $1,816 |
$1,000,000 | $153 | $2,422 |
RateCity research director Sally Tindall said, while inflation might be moving in the right direction, we were not out of the woods yet.
“The board is likely to have lingering concerns around underlying inflation and could very well press ahead with yet another cash rate hike on Tuesday,” Tindall said.
“Predicting the RBA’s moves has become increasingly difficult to do as we get closer to the cash-rate summit.
“While there’s no certainty what the RBA will decide, borrowers should plan for at least two more hikes. There’s no question we’re nearing the top of this perilously high mountain, but it’s unlikely we’re quite there just yet.”
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to our free daily newsletter.
