Three of four big banks now predict an OCR hike next week

Three big banks are now forecasting a cash rate hike next week on the back of surging inflation figures.

Economists from Westpac and NAB now expect a 0.15-percentage-point hike in May and a 0.25-percentage-point hike in June. This follows ANZ’s prediction of a 0.15-percentage-point rate rise on Tuesday next week.

Westpac expects cash rate to reach 2% by May 2023, NAB is predicting it will reach 2.5% by August 2024, while ANZ believes it will reach 2.25% over the next 12 months and peak above 3% sometime in 2023.

RateCity.com analysis showed that if RBA lifts the cash rate by 0.15 percentage points in May and 0.25 percentage points in June, someone with a $500,000 mortgage would pay an extra $39 in repayments next month, and by June would be paying $104 more a month than they are today.

And if the cash rate reaches 2% by May 2023, as predicted by Westpac, RateCity.com analysis showed the average owner-occupier with a current balance of $500,000, and 25 years remaining, could see their repayments rise by $374 by the end of the year and $511 by May 2023.

“A rate hike next week is now a live possibility on the back of Wednesday’s surging and surprising inflation figures,” said Sally Tindall, RateCity.com.au research director. “Three of the big four banks are now predicting the RBA will pull the trigger on a May cash rate hike.”

Tindall said that while “a series of rapid rate hikes are imminent, just how high the cash rate will go remains a point of conjecture.”

“On one hand you’ve got CBA predicting a neutral cash rate of 1.25%, Westpac believes it’ll get to 2%, while the markets are predicting it will get to 3.4% by August next year,” she said. “One thing likely to hold the RBA back is the fact that many Australians [are] up to their necks in housing debt. Many people may now be wondering if it’s worth fixing their home loan, even though ultra-low fixed rates are long gone.”

RateCity.com.au compiled the lowest home loan rates available to home loan borrowers:

Note: rates are for owner-occupiers paying principal and interest. LVR requirements apply

RateCity.com.au also compiled the big four bank lowest rates for owner-occupiers:

Note: Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply