Westpac has joined the other three major banks in expecting three additional interest rate increases by May, according to Chief Economist Bill Evans. The Reserve Bank is expected to raise interest rates in March, April, and May, resulting in an 11-year high of 4.1 percent.
Evans notes that at this level, the cash rate will be in deeply contractionary territory, and a pause will be necessary. Meanwhile, the Commonwealth Bank is still expecting a 3.85 percent cash rate by May.
Borrowers have already faced nine consecutive monthly interest rate hikes since May 2022, resulting in a 10-year high cash rate of 3.35 percent. As a result, repayments on an average $600,000 loan have surged by 42 percent to $3,284 from $2,306 for a 30-year loan.
Furthermore, if there are three more rate increases, the Commonwealth Bank’s standard variable rate will rise to 5.92 percent, resulting in a 54.7 percent increase in payments to $3,567 per year.
»Westpac issues dire interest rate warning for mortgage holders«