With the latest inflation rate clocking in at 7.8% for the December quarter, borrowers will almost certainly face another RBA cash rate hike next month, according to RateCity.com.au.
That would be the ninth rise in recent times, and would take the OCR to its highest rate since the September 2012 meeting.
“Australia has a serious inflation problem and it’s not going away without a fight,” said Sally Tindall, RateCity.com.au research director. “With annual inflation now sitting at 7.8%, the RBA has little choice but to serve Australians with yet another cash rate hike.”
Another 0.25 percentage point increase would mean the average borrower with a $500,000 debt before the hikes started in May last year could be looking at a total increase in their monthly repayments of $908 more a month, RateCity.com.au reported.
The table below showed the increase in monthly repayments in case of a 0.25% hike in February:
|
Loan size |
February increase |
Total increase May-Feb |
|---|---|---|
|
$500,000 |
$76 |
$908 |
|
$750,000 |
$114 |
$1,362 |
|
$1 million |
$152 |
$1,816 |
Note: Based on an owner-occupier paying principal and interest with 25 years remaining. Starting rate is the RBA av. existing owner-occupier variable rate of 2.86% in April and assumes banks pass the hikes on in full.
All four big banks expect the Reserve Bank to lift the OCR by 0.25 percentage points at February’s meeting. The peak of the cash rate remains a contentious issue, however.
The table below shows the cash rate forecasts of the big four banks’ economic teams:
|
|
Feb RBA mtg |
Cash rate peak |
Forecasted cuts |
|---|---|---|---|
|
+0.25% to 3.35% |
3.35%, February 23 |
2 x 0.25% cuts, end 2023 |
|
|
+0.25% to 3.35% |
3.85% May 23 |
4 x 0.25% cuts in 2024 |
|
|
+0.25% to 3.35% |
3.60% March 23 |
None |
|
|
+0.25% to 3.35% |
3.85% May 23 |
1 x 0.25% cut November 2024 |
Do you agree with the interest rate forecast? We’d love to hear from you in the comments below.
