Australians paying off a typical home could find themselves $513 a month worse off within two years if a major bank's prediction on interest rates comes true.
Westpac is now expecting the Reserve Bank of Australia to raise the cash rate from a record-low of 0.1 per cent to 1.75 per cent by early 2024.
The bank's chief economist Bill Evans is expecting six interest rates rises, in August 2022, October 2022, March 2023, June 2023, December 2023 and March 2024.
This is despite Reserve Bank Governor Philip Lowe repeatedly promising through much of 2021 that rates would not be raised until 2024 'at the earliest'.
Should Westpac's forecasts come true, someone paying off a typical Australian home would be paying $513 a month extra in mortgage repayments.
Australians paying off a typical home could find themselves $513 a month worse off within two years if a major bank's prediction on interest rates comes true. Westpac is now expecting the Reserve Bank of Australia to raise the cash rate from a record-low of 0.1 per cent to 1.75 per cent by early 2024 (pictured is a stock image)
NOW: record low 0.1 per cent
AUGUST 2022: Up 0.15 percentage points to 0.25 per cent
OCTOBER 2022: Up 0.25 percentage points to 0.5 per cent
MARCH 2023: Up 0.25 percentage points to 0.75 per cent
JUNE 2023: Up 0.25 percentage points to 1 per cent
DECEMBER 2023: Up 0.5 percentage points to 1.5 per cent
MARCH 2024: Up 0.25 percentage points to 1.75 per cent
In 2021, the median price of houses and apartments together rose by 22.1 per cent to $709,803, with the CoreLogic data showing the fastest calendar year increase since 1989.
With a 20 per cent deposit, a borrower buying a mid-price home in Australia would owe the bank $567,842.
This borrower with the Commonwealth Bank, Australia's biggest home lender, would now be paying off $2,212 a month with a 2.39 per cent variable rate.
Should that rate increase by 1.65 percentage points to 4.04 per cent, repayments would rise by $513 a month to $2,725.
That is also assuming the banks don't raise their variable mortgage rates beyond moves in the Reserve Bank cash rate.
RateCity research director Sally Tindall is advising borrowers to get ahead of their mortgage repayments.
'While the exact timing of the next cash rate hike is still not certain,