Westpac Forecasts FOUR Interest Rate Hikes by May
The Big Four banks in Australia have all predicted three more interest rate rises before May 2023, with Westpac now joining ANZ and NAB in expecting a 4.1 percent cash rate by then. This would be the highest rate in 11 years and add $283 to monthly repayments on an average $600,000 mortgage. It would also mark the most extended period of consecutive rate rises in the Reserve Bank of Australia’s history.
The current rate is 3.35 percent, having risen nine times since May 2022, and Governor Philip Lowe had previously suggested no rate increases until 2024. Borrowers have already seen their repayments surge by 54.7 percent in the last year, from $1,922 to $3,567 for an average $600,000 mortgage.
The rate rises are being implemented to tackle the worst inflation in 32 years. According to Westpac’s chief economist Bill Evans, if the rate reaches 4.1 percent, it would be in ‘deeply contractionary territory.’ NAB’s chief economist Alan Oster has suggested that a 4.1 percent cash rate could push Australia into a recession.
Related Facts:
• Westpac, ANZ, and NAB have all predicted three more interest rate rises before May 2023.
• The current rate is 3.35 percent, having risen nine times since May 2022.
• Monthly repayments on an average $600,000 mortgage have surged by 54.7 percent in the last year.
Key Takeaway:
The Big Four banks in Australia have all predicted three more interest rate rises before May 2023, with Westpac now joining ANZ and NAB in expecting a 4.1 percent cash rate by then. This would be the highest rate in 11 years and add $283 to monthly repayments on an average $600,000 mortgage.
Conclusion:
The Reserve Bank of Australia’s nine consecutive rate rises since May 2022 have already seen borrowers’ monthly repayments on an average $600,000 mortgage surge by 54.7 percent. This trend is set to continue, with Westpac, ANZ, and NAB expecting three more rate rises before May 2023, taking the cash rate to 4.1 percent. According to NAB’s chief economist Alan Oster, this could push Australia into a recession and prove to be a difficult period for borrowers.
