Texas · Sun Belt Post
Already stretched household budgets are about to take another hit, with the first four banks confirming they will pass on the Reserve Bank’s latest interest rate increase in full. Mortgage holders are bracing for higher repayments after the Reserve Bank on Tuesday lifted the cash rate by 25 basis points to 4.85 per cent, its highest level since December 2008. Macquarie was first to move after the decision, before Westpac, NAB and Commonwealth Bank on Wednesday confirmed they too would pass on the full increase to variable home loan customers.
The banks’ changes will take effect from Friday, November 13, leaving borrowers with little time to prepare for yet another jump in repayments. For someone with a $500,000 mortgage, the latest increase will add about $77 to monthly repayments, taking the total increase in monthly repayments to about $380. On a $700,000 loan, borrowers will need to find an extra $107 a month, taking the total increase to $532.
Mortgage holders are set to be hit again after Westpac and NAB joined Macquarie in passing on the Reserve Bank’s latest rate rise, with higher repayments to kick in from next Friday. For a $1 million mortgage, the latest hike will add around $153 a month, taking the total increase in repayments to $759. Westpac consumer chief executive Carolyn McCann said the latest rise would be difficult for many households, particularly after multiple increases this year.
“We know another interest rate increase may be difficult for many households, particularly those who have already adjusted their budget this year,” she said. “The majority of our customers are managing well and remain ahead on their repayments. “For customers who are feeling the pressure, we encourage them to reach out to us early so we discuss the support options available.” Source: Canstar ANZ had not announced by Wednesday afternoon whether it would pass on the latest increase, or when any changes would take effect.
The RBA’s decision marked the fifth rate rise this year, with the board voting 6-3 in favour of the increase. Governor Michele Bullock stopped short of signalling where rates would go next, saying the board would “take stock” as previous increases continued to flow through the economy. She also said the central bank’s forecasts did not point to a recession in Australia, although economic growth was expected to slow significantly and households would feel poorer.
While borrowers are being hit almost immediately, the picture is far less generous for savers. Westpac has announced it will lift the maximum ongoing rate on its Spend&Save account to 6.20 per cent, although the account is limited to customers aged 18 to 40 who meet monthly conditions. Source: Canstar It is also passing on the full increase to the maximum rate on its Life bonus saver account, taking it to 5.50 per cent.
However, the base rate on both accounts remains unchanged at just 0.10 per cent, meaning customers who do not meet the monthly criteria will not benefit from the higher headline rates. Westpac has not announced any changes to its eSaver account, while NAB has not revealed any savings rate increases at this stage. Canstar data insights director Sally Tindall said mortgage customers were now staring down another difficult rise in repayments.
“Friday the 13th is shaping up to be an unlucky day for mortgage customers, with millions of Australians set to cop another increase to their home loan repayments,” she said. “Westpac, NAB (and CBA) have now confirmed the inevitable. ANZ should stump up and tell their mortgage customers what will happen to their loan.”
Source: Real Estate
