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The Reserve Bank looks to lift the cash rate as ANZ & Westpac raise rates

Interest pain for homeowners as two of Australia’s biggest banks make BIG mortgage payments with just 24 hours of each other: ‘It’s going to sting’

  • ANZ increased its fixed rates by 0.90 percentage points on Wednesday
  • Westpac also raised its fixed interest rate by 0.50 percentage point on Tuesday
  • Philip Lowe said the RBA board wants to increase the number of cases by 0.25 or 0.50

Two of Australia’s largest banks have raised fixed rates as the Reserve Bank aims to raise cash rates again next month.

ANZ raised its fixed interest rate by 0.90 percentage points on Wednesday, while Westpac raised interest rates by 0.50 points on Tuesday.

It comes as the Reserve Bank plans to raise its spot interest rate by 0.25 percent or 0.50 percent in July.

ANZ is the second major bank this week to raise fixed interest rates.  The bank raised interest rates by a maximum of 0.90 percentage point on Wednesday

ANZ is the second major bank this week to raise fixed interest rates. The bank raised interest rates by a maximum of 0.90 percentage point on Wednesday

Westpac raised its fixed interest rate by 0.50 percentage points on Tuesday

Westpac raised its fixed interest rate by 0.50 percentage points on Tuesday

The rate hikes by the two banks will put even more financial pressure on new homeowners or existing borrowers who need to refinance amid the cost of living crisis.

Westpac raises tariff hike forecasts

JULY: 0.5 percentage point up to 1.35 percent

AUGUST: 0.25 percentage point up to 1.6 percent

NOVEMBER: 0.25 percentage point up to 1.85 percent

DECEMBER: 0.25 percentage point up to 2.1 percent

FEBRUARY: 0.25 percentage point up to 2.35 percent

Sally Tindall, Research Director of RateCity.com.au said: “ANZ and Westpac have fired yet another round of hikes as the cost of fixed-rate financing continues to rise, alongside market expectations that cash interest could hit 4 percent.”

“We now have fixed rates for owner-occupiers that start with a ‘5’ and in some cases a ‘6’.”

According to Ms Tindall, most of ANZ’s flat rate owner-occupier rates have increased by 3.5 percent or more in the past year.

ANZ’s three-year fixed rate was up 3.85 percent in less than a year.

Reserve bank governor Philip Lowe revealed on Wednesday that the RBA board has considered raising the cash interest rate by 0.25 or 0.50 percent in July.

Raising it by 0.25 percentage point would mean that a borrower with a $500,000 loan could pay an additional $68 per month.

But if the new cash interest is increased by 0.50 points, that same borrower can pay an additional $137 in their monthly repayments.

The current cash rate is 0.85 percent.

“Variable rate borrowers should be preparing for another double hike in July and for a spot rate to rise above 2 percent by Christmas – possibly well above this limit,” Ms Tendell continued.

Reserve Bank governor Philip Lowe (pictured) claimed the board wanted to raise the cash interest rate by 0.25 or 0.50 percent next month.

Reserve Bank governor Philip Lowe (pictured) claimed the board wanted to raise the cash interest rate by 0.25 or 0.50 percent next month.

Sally Tindall, director of research at RateCity.com.au, advised borrowers to start with

Sally Tindall, director of research at RateCity.com.au, advised borrowers to start with “changes,” such as reviewing bills if they think they will struggle with repayments

“The board of directors is likely to continue its rapid approach to rate hikes for the next six months.”

She added that the RBA is “breaking off the cheap band-aid” and for many Aussies “it will sting.”

The research director advised borrowers to start with “changes” if they feel they will struggle with repayments by Christmas.

“Look at all your regular bills and expenses to see where you can cut back, or possibly switch to a more competitive deal.”

Australian homeowners are expected to face four more rate hikes by Christmas, with inflation expected to worsen this year.

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