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ANZ, NAB and Commonwealth Bank use Queen’s death to announce an increase in variable mortgage rates

ANZ, NAB and Commonwealth Bank used the Queen’s death cover to announce a rise in variable mortgage rates late Friday afternoon.

Three of the Big Four banks issued statements as 14 Commonwealth countries, including Australia, mourned the death of their 96-year-old head of state.

They announced increases of 0.5 percentage point in variable mortgage rates three days after the Reserve Bank of Australia raised the spot rate by half a percentage point to its seven-year high of 2.35 percent, marking the fifth consecutive monthly increase. meant.

As banks routinely raise their rates following an official hike, the timing has been curious, with major corporations and governments often using a major news day to announce unpopular news in the hopes it would be drowned out.

The latest increases mean a borrower with a typical $600,000 will see their monthly repayments rise by $173, starting next Friday.

ANZ released a statement at 4:12 p.m. Sydney time in which Maile Carnegie, the group’s retail director, says the bank cares about struggling borrowers, with rates rising at the fastest pace in nearly three decades.

ANZ and NAB have used the Queen's death cover to announce a rise in variable mortgage rates late on a Friday afternoon (Her Majesty is pictured in June 2022)

ANZ and NAB have used the Queen’s death cover to announce a rise in variable mortgage rates late on a Friday afternoon (Her Majesty is pictured in June 2022)

“We understand that the cost of living and the changing pricing environment affect customers in different ways and our experienced teams are here to help our customers understand what these changes mean for them,” she said.

What the banks are predicting NOW

COMMON BANK: A spot rate of 2.85 percent in November (versus a previous forecast of 2.6 percent)

ANZ: a 3.35 percent spot rate in December (one month later than previous forecast for November)

WESTPAC: A cash rate of 3.35 percent in February (unchanged)

NAB: A cash interest rate of 2.85 percent in November (unchanged)

Source: RateCity

“While many of our customers remain in a strong position, we encourage any customer experiencing issues to contact our experienced teams as soon as possible to discuss additional personal support.”

The latest increase of 50 basis points means ANZ’s lowest floating rate will rise from 3.69 percent to 4.19 percent effective September 16.

NAB’s lowest variable rate is up 0.5 percentage points to 4.24 percent from .3.74 percent, as of Sept. 16.

The Commonwealth Bank, Australia’s largest mortgage lender, was the third bank to announce an increase, releasing a statement shortly before 6 p.m. Sydney time.

CBA also increases its variable rates by 0.5 percentage points, also effective September 16.

This will see the lowest floating rate rise from 3.69 percent to 4.19 percent.

Angus Sullivan, CBA’s retail banking group executive, said he cared about borrowers struggling with their household budget.

“We know that a lot is changing for our customers right now, and supporting them through this time is a priority for us,” he said.

ANZ issued a statement at 4:12 p.m. Sydney time announcing a 0.5 percentage point increase in variable mortgage rates (pictured is a bank branch in Sydney)

ANZ issued a statement at 4:12 p.m. Sydney time announcing a 0.5 percentage point increase in variable mortgage rates (pictured is a bank branch in Sydney)

ANZ issued a statement at 4:12 p.m. Sydney time announcing a 0.5 percentage point increase in variable mortgage rates (pictured is a bank branch in Sydney)

The Reserve Bank of Australia on Tuesday raised the spot rate by 0.5 percentage points to a seven-year high of 2.35 percent, from an existing six-year high of 1.85 percent.

Governor Philip Lowe gave a speech on Thursday, which economists believe meant the RBA would hike rates two more times during this tightening cycle.

“We are aware that there are delays in the functioning of monetary policy and interest rates have risen very quickly,” he told the Anika Foundation.

“And we recognize that, all else being equal, the argument for a slower rate of rise in interest rates grows stronger as the level of cash interest rises.”

Following that speech, the Commonwealth Bank, Australia’s largest mortgage lender, updated its forecast for the RBA to raise interest rates by 0.25 percentage point in October, followed by another quarter of a percentage point in November.

This would bring the spot interest rate to 2.85 percent, up from an earlier forecast of 2.6 percent in November.

But Gareth Aird, Commonwealth Bank’s head of Australian economics, said the RBA could cut rates in the second half of 2023, with CBA forecasting borrowers would get 0.5 percentage points.

ANZ has also updated its forecasts, with spot interest rates peaking at a 10-year high of 3.35 percent in December, instead of November as previously forecast.

Westpac still forecasts a cash interest rate of 3.35 percent in February 2023, while NAB still forecasts a cash rate of 2.85 percent in November — with CBA now copying that forecast.

ANZ released a statement at 4:12 p.m. Sydney time in which Maile Carnegie (pictured), the retail group director, says the bank cares about struggling borrowers, with rates rising at the fastest pace in nearly three decades.

ANZ released a statement at 4:12 p.m. Sydney time in which Maile Carnegie (pictured), the retail group director, says the bank cares about struggling borrowers, with rates rising at the fastest pace in nearly three decades.

ANZ released a statement at 4:12 p.m. Sydney time in which Maile Carnegie (pictured), the retail group director, says the bank cares about struggling borrowers, with rates rising at the fastest pace in nearly three decades.

Three of the Big Four banks – Commonwealth, Westpac and NAB – are expecting a 0.25 percentage point rate hike in November, which would push the spot interest rate to a nine-year high of 2.6 percent.

ANZ expects a larger increase of 0.5 percentage points next month, bringing the spot rate to 2.85 percent, which would be the highest level since May 2013.

Borrowers in May, June, July, August and now September have weathered 2.25 percentage points in rate hikes, the strongest since 1994.

Inflation rose 6.1 percent in the year to June, the fastest pace since 1990 without the one-time effect of the GST introduced in 2000.

The RBA expects the consumer price index to reach a 32-year high of 7.75 percent in 2022, a level well above the target of 2 to 3 percent.

The latest rate hike of 0.5 percentage point means a Commonwealth Bank borrower with an average mortgage of $600,000 will see their monthly mortgage payments rise by $173.

Average home loan maintenance costs will rise to $2,966 from $2,793 in the coming weeks as a popular variable mortgage rate rose from 3.79 percent to 4.29 percent.

The latest increase means this borrower would see their monthly mortgage payments rise $660 since early May.

Just four months ago, repayments stood at $2,306, when the cash interest rate was still at a record low of 0.1 percent and the Commonwealth Bank was still offering 2.29 percent variable mortgage rates.

Which means an increase of 0.5 percentage point in September

$500,000: $145 up to $2,472 from $2,327

$600,000: $173 up to $2,966 from $2,793

$700,000: $202 up to $3,460 from $3,258

$800,000: $231 up to $3,955 from $3,724

$900,000: $260 up to $4,449 from $4,189

$1,000,000: $289 up to $4,943 from $4,654

Calculations based on the spot rate rising to 2.35 percent from 1.85 percent, which would see a popular Commonwealth Bank variable rise from 3.79 percent to 4.29 percent

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