ANZ and Westpac have again hiked the interest rate on their fixed rate loan products.
The quick-fire rate hikes now see a five-year fixed-rate loan from ANZ with an interest rate of 6.09 per cent, up 0.9 per cent, while Westpac has reached 5.39 per cent, up 0.5 per cent on their five-year loan.
RateCity.com.au research director, Sally Tindall said fixed rates are likely to keep rising.
“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,” Ms Tindall said.
“We’ve now got fixed rates for owner-occupiers starting with a ‘5’ and in some cases a ‘6’.”
Ms Tindall said the majority of ANZ’s owner-occupier fixed rates have risen by 3.5 percentage points or more in the last 12 months.
“One of the biggest rises has been to the bank’s three-year fixed rate. It has shot up by 3.85 percentage points in less than a year,” she said.
Fixed rates aren’t the only loans undergoing a major transformation with Reserve Bank of Australia Governor, Philip Lowe suggesting the Board would consider hiking the cash rate again next month by either 0.25 percentage points or 0.50 percentage points.
If the RBA hikes by 0.5 percentage points in July, a borrower with a $500,000 loan could see their repayments rise by an additional $137 per month.
“While Governor Lowe has poured cold water on suggestions the cash rate could get to 4 per cent by Christmas, the Board is likely to continue its rapid-fire approach to cash rate hikes over the next six months,” Ms Tindall said.
“The RBA is ripping the low-rate band-aid off, and quickly.
“For many Australians it’s going to sting.”
Ms Tindall said borrowers need to get their finances in order in the event the RBA continues to hike rates.
“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,” she said.
Ms Tindall said households with savings buffers in place and recent pay rises should be able to adjust to higher interest rates, however, many will still struggle.
“There will be plenty of families who will soon find it difficult to balance the monthly budget, particularly if the cost of living continues to spike, as it’s expected to do.”
“If you don’t think you’ll be able to make ends meet by Christmas, start making changes now. Review all your regular bills and expenses to see where you can make cutbacks, or potentially switch to a more competitive deal.
“If you can’t see a path through, put up your hand and ask for help. There are experts that can provide free financial advice to help you chart a course through these difficult financial times.”