The Reserve Bank looks to lift the cash rate as ANZ & Westpac raise rates

Two of Australia’s major banks have raised fixed rates as the Reserve Bank looks to hike the cash rate again next month. 

ANZ on Wednesday put the fixed rate up 0.90 percentage points while Westpac hiked rates by 0.50 points on Tuesday.

It comes as the Reserve Bank looks to raise the cash rate in July by either 0.25 per cent or 0.50 per cent. 

Westpac raised fixed rates on Tuesday by 0.50 percentage points 

The rate hikes by the two banks will add further financial strain to new home owners or existing borrowers re-financing amidst the cost of living crisis.

RateCity.com.au research director Sally Tindall said: ‘ANZ and Westpac have fired off yet another round of hikes as the cost of fixed-rate funding continues to rise, alongside market expectations the cash rate could hit 4 per cent.’

‘We’ve now got fixed rates for owner-occupiers starting with a ‘5’ and in some cases a ‘6’.’

Most of ANZ’s owner-occupier fixed rates have risen by 3.5 per cent or more in the past year, according to Miss Tindall.

ANZ’s three-year fixed rate had increased by 3.85 per cent in less than a year.

Reserve Bank Governor Philip Lowe revealed on Wednesday that the RBA board has considered putting the cash rate up by either 0.25 or 0.50 per cent in July.

If it is raised by 0.25 percentage points it would mean a borrower with a $500,000 loan could be paying an additional $68 a month.

But if the new cash rate is increased by 0.50 points, that same borrower could pay an extra $137 in their monthly repayments.

The current cash rate is 0.85 per cent. 

‘Variable rate borrowers should prepare themselves for another double hike in July and for the cash rate to rise above 2 per cent by Christmas – potentially well above this mark,’ continued Miss Tendell.

Reserve Bank governor Philip Lowe (pictured) claimed that the board was looking to raise the cash rate by either 0.25 or 0.50 per cent next month

RateCity.com.au research director Sally Tindall recommended borrowers to begin ‘making changes’ such as reviewing bills if they feel they’ll struggle with repayments 

‘The Board is likely to continue its rapid-fire approach to cash rate hikes over the next six months.’

She added that the RBA is ‘ripping the low-rate band-aid off’ and for many Aussies ‘it’s going to sting’. 

The research director recommended borrowers begin ‘making changes’ if they feel they’ll struggle with repayments by Christmas time.

‘Review all your regular bills and expenses to see where you can make cutbacks, or potentially switch to a more competitive deal.’

Australian homeowners are expected to face four more interest rate rises by Christmas with inflation predicted to worsen this year.