The Reserve Bank of Australia (RBA) started hiking the official interest rate in May and has delivered four double-whammy hikes since June.
This got economists and borrowers worried about just how high interest rates may go.
But after RBA governor Philip Lowe spoke last week, following the bank’s September 0.5 per cent rate hike, predictions have changed.
Also read: RBA ‘at risk’ of ‘overshooting’ on rates
This is what the Big Four banks are now forecasting:
CBA: cash rate to rise by 0.25 per cent to 2.60 per cent in October, peaking at 2.85 per cent in November this year.
Westpac: cash rate to rise by 0.25 per cent to 2.60 per cent in October, peaking at 3.35 per cent in February 2023.
NAB: cash rate to rise by 0.25 per cent to 2.60 per cent in October, peaking at 2.85 per cent by November.
ANZ: cash rate to rise by 0.50 per cent in October to 2.85 per cent and hike by 0.25 per cent in November and December, which will be the peak at 3.35 per cent.
And the rest of the market followed suit in thinking interest rates may not go as high as previously predicted.
ANZ research found that what analysts and economists were predicting, had started to cool.
“Market pricing has moved closer to the RBA's tone, as aggressive rate-hike expectations unwound,” ANZ’s RBA Bias Index found.
“Despite a change in pricing after last week's statement, the market is ahead of RBA rhetoric, continuing the disparity of this tightening cycle.”
For someone with a $1 million mortgage, repayments could rise by a total of $1,818.
RateCity research director Sally Tindall said that while we may be done with double rate hikes, the trajectory for the cash rate was still up.
“While we’re likely to be well over the halfway mark, there could still be another one percentage point of hikes to come, in order to get inflation back under control. Potentially even more,” Tindall said.