Tuesday 2 August 2022 11:45 PM Macquarie Bank first to pass on RBA interest rate rise: Commonwealth Bank ... trends now
Macquarie Bank is the first major Australian lender to pass on the new cash rate rise with its variable mortgages set to jump by 0.5 percentage points.
The hike will be introduced next Friday, August 12, following the Reserve Bank of Australia's 50 basis point increase on Tuesday - bringing the cash rate to a six-year high of 1.85 per cent.
The RBA's fourth consecutive increase pushed the cash rate up from a three-year high of 1.35 per cent after inflation soared to 6.1 per cent in the June quarter.
While Australia's big four were quick to pass on the pain in May, June and July - the Commonwealth Bank, ANZ, NAB and Westpac - are yet to announce whether they will raise rates for mortgage holders.
Macquarie Bank will enforce the Reserve Bank of Australia's new cash rate rise of 0.5 percentage points from next Friday, August 12
A borrower from the Commonwealth Bank with an average $600,000 loan will need to find an extra $169 each month if the new rate is passed
$500,000: Up $141 from $2,215 to $2,356
$600,000: Up $169 from $2,658 to $2,827
$700,000: Up $197 from $3,101 to $3,298
$800,000: Up $225 from $3,544 to $3,769
$900,000: Up $253 from $3,987 to $4,240
$1,000,000: Up $281 from $4,430 to $4,711
Increases based on Reserve Bank cash rate rising from 1.35 per cent to 1.85 per cent taking popular Commonwealth Bank variable rate from 3.39 per cent to 3.89 per cent
RBA governor Philip Lowe in a statement said the central bank 'places a high priority' on getting inflation back within the two to three per cent target.
'The path to achieve this balance is a narrow one and clouded in uncertainty, not least because of global developments,' he said.
'The outlook for global economic growth has been downgraded due to pressures on real incomes from higher inflation, the tightening of monetary policy in most countries, Russia's invasion of Ukraine and the Covid containment measures in China.'
Inflation in the year to June surged by 6.1 per cent, the fastest pace since 2001.
The consumer price index was the steepest since 1990 when the one-off effect of the GST introduction was taken out.
Both the Reserve Bank and Treasury are now expecting inflation to hit a 32-year high of 7.75 per cent by the end of 2022 and remain above the RBA target until 2024.
'The expected moderation in inflation reflects the ongoing resolution of global supply-side problems, the stabilisation of commodity prices and the impact of rising interest rates,' Dr Lowe said.
The latest RBA rate increase means a homeowner paying off an average $600,000 mortgage will have to find an additional $169 for their monthly mortgage repayments, as they climbed to $2,827 from $2,658.
The big four banks were all expecting a 50 basis point increase in August and all of them are expecting another 50 basis point rise in September, that would take the cash rate to a seven-year high of 2.35 per cent.
The ANZ bank is expecting a 3.35 per cent cash rate by November, which would mean 50 basis point rate rises in September, October and on Melbourne Cup Day (pictured is a Sydney branch)
Treasurer Jim Chalmers told Parliament the latest rate rise would hit families the hardest amid tge growing cost of living crisis
But the ANZ bank is expecting a 10-year high 3.35 per cent cash rate by November, which would mean 50 basis point rate rises in September, October and on Melbourne Cup Day.
Should that prediction materialise, a borrower with a $600,000 mortgage would see their monthly repayments climb by another $708, compared with where they are now, before the banks adjust their variable mortgage rates to account for the RBA's latest 50 basis point increase.
A 3.35 per cent cash rate would also mean this same borrower would be paying $1,060 more a month by November, compared with May when the cash rate was still at a record-low of 0.1 per cent.
Westpac is expecting a 3.35 per cent cash rate but by February next year, with chief economist Bill Evans predicting another big 50 basis point rate rise in September (pictured