If the banks’ predictions are correct, the RBA’s November meeting will be the 13th rate hike in this cycle.
Westpac has announced a switch to their forecast for the Reserve Bank of Australia’s (RBA) meeting on 7 November, predicting that the meeting will end with another rate rise. The change comes off the back of last Wednesday’s consumer price index (CPI) figure for Q3, which was higher than expected on all fronts.
With CBA and ANZ changing their prediction one day prior to Westpac, and NAB also prophesying a rise, this is the first time in seven months that all four players unanimously predicted an increase.
Sally Tindall, research director at RateCity, revealed: “The big four banks are now in agreement – a cash rate of 4.35 per cent is the more likely outcome of the next RBA board meeting.”
This would be a 0.25 per cent hike compared to the current cash rate, or the equivalent of an additional $76 per month added to a $500,000 mortgage.
In total, across all 13 hikes, RateCity calculated that a home owner with $500,000 of debt will have seen a total increase of $1,210 to their monthly repayments since March 2022 – a staggering 52 per cent rise.
“A rate hike of 0.25 percentage points would take Australia’s cash rate to the highest level since November 2011 and put many borrowers in a tricky position,” Ms Tindall warned.
“While it’s astounding to think the last 12 rate hikes haven’t been enough, the board has made it clear it will do what it takes to rein in inflation using the one blunt instrument it has.”
The news does not bode well for borrowers, but Ms Tindall underscored that this is no time for panic. “Instead of dreading what could come round the corner, start planning for it, before any rate decision is made,” she urged.
“Call up your bank and ask for a rate cut. Any reduction in your interest can offset whatever decision is made on 7 November and beyond.”
If the RBA goes through with the rise as the big four banks predict, it would be going against the advice of key figures in the property industry.
Hayden Groves, president of the Real Estate Institute of Australia (REIA), noted that despite the Q3 CPI being higher than anticipated, “it is the third consecutive quarter of annual decreases, as well as the lowest since March 2022, confirming a downward trend in the rate of increase”.
“With the CPI having peaked late last year and trending down, it is time for the RBA to stop further increases on interest rates and wait for further data on the economy,” he stated.
Mr Groves observed that spending has declined, household disposable incomes have shrunk and full-time employment has declined.
“We need to avoid the serious risk of stalling the economy,” he concluded.