Banking giant ANZ is now predicting home borrowers will cop four larger 50 basis point interest rate rises by November.
With inflation set to soon hit the worst level in 32 years, ANZ has updated its forecasts to have the Reserve Bank cash rate more than doubling from an existing three-year high of 1.35 per cent now to a 10-year-high of 3.35 per cent on Melbourne Cup Day.
ANZ head of Australian economics David Plank said this would see the RBA raise rates by 0.5 percentage points in August, September, October and November.
‘We think the RBA will take the cash rate target to a restrictive setting of above three per cent by late 2022, more than 12 months earlier than our previous forecast,’ he said.
A two percentage point increase in mortgage rates by November would see a borrower with an average $600,000 owe $708 more a month in mortgage repayments.
But Mr Plank said there was an outside chance the Reserve Bank would raise rates by 75 basis points at one of its meetings this year to round the number to the nearest 0.25 per cent.
Since May, Australian borrowers have copped 1.25 percentage points of RBA rate rises – with the subsequent increases in June and July marking the steepest monetary policy tightening since 1994.
ANZ is the only big four bank whose forecasts are now in line with the 30-day interbank futures market, which is predicting a 3.35 per cent cash rate but by December.
With inflation set to soon hit the worst level in 32 years, ANZ has updated its forecasts to have the Reserve Bank cash rate more than doubling from 1.35 per cent now to a 10-year-high of 3.35 per cent on Melbourne Cup Day. ANZ head of Australian economics David Plank said this would see the RBA raise rates by 0.5 percentage points in August, September, October and November (pictured is the Seven Hills branch in Sydney’s west)
ANZ is expecting June quarter inflation data, due out on July 27, to show the consumer price index surging by 6.3 per cent – the fastest pace since 1990.
In a possible sign of things to come for Australia, New Zealand’s inflation rate in the year to June surged by 7.3 per cent, the biggest increase in 32 years.
The Commonwealth Bank, Australia’s biggest home lender, is expecting a 2.6 per cent cash rate by November, based on a 50 basis point rise in August and September followed by 25 basis point move on Melbourne Cup Day.
Westpac has released new forecasts showing the Reserve Bank cash rate will peak at a nine-year high of 2.6 per cent by February 2023 and stay at that level until at least December 2025.
Before then, home borrowers are expected to cop another 0.5 percentage point interest rate rise in August.

Since May, Australian borrowers have copped 1.25 percentage points of RBA rate rises – with the subsequent increases in June and July marking the steepest monetary policy tightening since 1994 (pictured is a Melbourne auction)
Westpac chief economist Bill Evans released a video last week predicting 0.25 percentage point rate rises in November, December and February.
‘I would like to see a pause in September and October,’ he said.
But Mr Evans predicted the tightening cycle would resume in November, with a series of 25 basis point increases, after inflation for the September quarter, due out on October 26, showed an even worse number than June quarter.
‘They will have to respond to that and we’d expect 25 in November, 25 in December and then another one in February,’ Mr Evan said,
New CoreLogic data has revealed 41.9 per cent of house and unit markets in Australia fell in the June quarter, based on median prices in capital city postcodes.
By comparison, 23.6 per cent of markets were in decline in the March quarter before the RBA rates raises but as the banks increased their fixed mortgage rates.
The data on 3,085 capital city property markets covered the May and June rate rises that took the cash rate to 0.85 per cent but not the latest July increase that took rates to a three-year high of 1.35 per cent.

Westpac has released new forecasts showing the Reserve Bank cash rate will peak at a nine-year high of 2.6 per cent by February 2023 and stay at that level until at least December 2025 (pictured is a Melbourne branch)
CoreLogic economist Kaytlin Ezzy said the downturn that began in Sydney and Melbourne was now spreading to Brisbane, Canberra and Hobart.
‘Historically, premium suburbs are more volatile than the more affordable areas, values shoot up much faster during an upturn, but are among the first to fall during a declining market,’ she said.
Sydney was the worst affected with 81.1 per cent of house markets falling during the June quarter.
The median house price fell by three per cent during the June quarter to $1.382million but three out of four suburbs still have a mid-point house value of more than $1million with no house markets under $500,000.
Sydney unit prices fell by 2.1 per cent in the June quarter to $821,850.
Melbourne median house price fell by 2.4 per cent in the June quarter to $975,850 with 80 per cent of house markets affected, compared with 60 per cent of unit markets.
The downturn that begun in the city’s inner-east is now more widespread.
‘While units in some of those more expensive inner-city areas are starting to decline nationally, fewer unit markets fell over the quarter than houses,’ Ms Ezzy said.

New CoreLogic data has revealed 41.9 per cent of house and unit markets in Australia fell in the June quarter, based on median prices in capital city postcodes (pictured is an inner-city Melbourne house)
Hobart’s median house price fell by 0.5 per cent to $796,863 during the June quarter with half the markets suffering a decline.
But house prices rose in Brisbane, Adelaide, Perth, Darwin and Canberra during the final three months of the 2021-22 financial year.
Brisbane’s median house price rose by 2.5 per cent during the June quarter to $892,133 but 11.6 per cent of its house markets suffered a quarterly fall in values.
The May rise was the first since November 2010, ending the era of the record-low 0.1 per cent cash rate.
The half a percentage point increase in June was the steepest since February 2000.
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