The Reserve Bank of Australia (RBA) is expected to make its final rate hike for the year next week, raising the cash rate to a 10-year high of 3.1%.
Over the course of 2022, the cash rate has risen from 0.1% in April to 2.85% by November.
Domain chief of research and economics Dr. Nicola Powell said the upside in the cash rates has resulted in the current property market downturn.
“With interest rates rising and property prices falling, it can understandably make homeowners feel uncertain about their property journey but our analysis of directly comparing the steepness and duration of an upswing and subsequent downturn since 1995 should provide some bigger picture perspective,” she said.
According to the latest forecasts from the major banks, here’s how the cash rate will go in the current cycle:
|
Major Bank |
Peak Cash Rate Projection |
Expected delivery time |
|
ANZ |
3.85% |
Mid 2023 |
|
CommBank |
3.10% |
Late 2022 |
|
NAB |
3.60% |
Early 2023 |
|
Westpac |
3.85% |
Early 2023 |
Domain Home Loans general manager Kareene Koh said the rapid increase in interest rates since May pushed many Australians to refinance.
“Customers are responding in a variety of different ways. Many are looking at refinancing to try and alleviate the pressure on the household budget,” she said.
“With the wave of fixed rate expiry in 2023, we will start to see the true impact of interest rate increases on consumer spending as more Australians tighten their belts to cover the step up in repayments over the last seven months.”
Here’s how high extra repayments would be following the likely cash rate hike next week:
|
Home Loan Principal ($) |
Extra Repayments ($) |
||
|
+275bps increase since May |
+25bps increase in December |
+300bps increase since May |
|
|
500,000 |
817 |
76 |
893 |
|
750,000 |
1,223 |
114 |
1,337 |
|
1,000,000 |
1,631 |
152 |
1,783 |
|
2,000,000 |
3,535 |
303 |
3,838 |
—
Photo by Vlada Karpovich from Pexels
Collections: Mortgage News Interest Rates
Share