Utilizing the Queen’s passing as cover, ANZ, NAB, and the Commonwealth Bank announced a hike in variable mortgage rates late on a Friday afternoon.
As 14 Commonwealth countries, including Australia, expressed their sorrow at the passing of their 96-year-old head of state, two of the Big Four banks issued comments.
Three days after the Reserve Bank of Australia increased the cash rate by half a percentage point to a seven-year high of 2.35 percent, marking the fifth consecutive month of hikes, they both announced increases to variable mortgage rates of 0.5 percentage points.
The timing was peculiar since businesses and governments sometimes reveal unfavourable news on a big news day in the hopes that it would be overshadowed by more positive news, even though banks regularly boost their rates after an official hike.
At 4:12 p.m. Sydney time, ANZ issued a statement in which Maile Carnegie, its group executive for retail, claimed that the bank cared about struggling borrowers despite interest rates rising at the quickest rate in almost three decades.
We recognise that the rising cost of living and the fluctuating rate environment are having diverse effects on our clients, and our knowledgeable staff are here to assist them understand what these developments mean for them, she added.
What the banks are forecasting RIGHT NOW
COMMONWEALTH BANK: By November, a 2.85 percent cash rate (up from a previous forecast of 2.6 per cent)
3.35 percent cash rate by December, according to ANZ (a month later than earlier prediction for November)
WESTPAC: By February, a 3.35 percent cash rate (unchanged)
NAB: A cash rate of 2.85% by November (unchanged)
While many of our clients are still in good shape, we urge those who may be having problems to get in touch with our knowledgeable staff as soon as they can to talk about further, individualised help.
The most recent 50 basis points implies that starting of September 16, ANZ’s lowest variable rate would increase to 4.19 percent from 3.69 percent.
Effective September 16, NAB’s lowest variable rate will increase by 0.5 percentage points to 4.24 percent from 3.74 percent.
The third bank to announce an increase was the Commonwealth Bank, the largest home lender in Australia, which made its announcement just before 6 o’clock in Sydney.
The cash rate was previously at a six-year high of 1.85 percent on Tuesday until the Reserve Bank of Australia increased it by 0.5 percentage points to a seven-year high of 2.35 percent.
In a speech on Thursday, Governor Philip Lowe indicated that the RBA will increase interest rates twice more during current tightening cycle.
We are aware that there are delays in how monetary policy is implemented and that interest rates have risen extremely swiftly, he added.
And we acknowledge that as the level of the cash rate increases, the justification for a slower rate of growth in interest rates grows stronger.
Following that speech, Australia’s largest mortgage lender, Commonwealth Bank, revised its predictions, predicting that the RBA will increase rates by 0.25 percentage points in October and another quarter of a percentage point in November.
By November, the cash rate would rise to 2.85 percent from the prior prediction of 2.6 percent.
The cash rate is now expected to peak at a 10-year high of 3.35 percent in December rather than November as originally predicted, according to new projections from ANZ.
While NAB continues to foresee a 2.85 percent cash rate by November, and CBA has already adopted that projection, Westpac continues to anticipate a 3.35 percent cash rate by February 2023.
The November rate hike is anticipated by three of the Big Four banks, Commonwealth, Westpac, and NAB, and would raise the cash rate to a nine-year high of 2.6%.
Next month, ANZ anticipates a larger 0.5 percentage point increase, which would raise the cash rate to 2.85 percent, the highest level since May 2013.
The rate hikes for borrowers in May, June, July, August, and now September total 2.25 percentage points, which is the most since 1994.
Without accounting for the GST’s one-time impact in 2000, inflation soared by 6.1% in the year to June, the highest rate since 1990.
A Commonwealth Bank borrower with an average $600,000 mortgage would see their monthly mortgage repayments increase by $173 as a result of the most recent rate increase of 0.5 percentage points.
As a common variable mortgage rate increased to 4.29 percent from 3.79 percent, the average cost of house loan service is expected to rise to $2,966 from $2,793 in the coming weeks.
With the most recent increase, this borrower would have seen a $660 increase in monthly mortgage payments since the beginning of May.
Repayments were $2,306 only four months ago, when the cash rate was still a record-low 0.1 percent and the Commonwealth Bank was still providing variable mortgage rates of 2.29%.