Dire prediction for mortgage holders as cash rate expected to rise

Interest rates it could rise another four times before Christmas, according to one of Australia’s big four banks, painting a bleak picture for homeowners as cost-of-living pressures already strain the household budget.

ANZ on Tuesday forecast interest rates could rise by 50 basis points in August, September, October and November, leaving the cash rate at 3.35 percent.

That means the average Sydney mortgage holder could pay another $1,300 per month.

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Mortgage holders may be facing significant costs as rates are expected to rise again. (Supplied)

However, the ANZ prediction could be the bare minimum of rate hikes, with minutes from the last RBA meeting showing the board believes the cash rate is still well below where it should be.

“The level of interest rates was still too low for an economy with a tight labor market and facing a period of higher inflation,” the minutes say.

“Members agreed that further action would be needed to normalize monetary conditions in Australia in the coming months.”

The Reserve Bank will announce a new cash rate
The Reserve Bank of Australia may hike rates higher than expected. (Supplied)

RateCity.com.au research director Sally Tindall warned borrowers to prepare for significantly more rate pain.

“ANZ now believes the cash rate could hit 3.35 percent in November – that would be a 3.25 percentage point increase in the space of seven months,” he said.

“With central banks raising policy rates around the world, it’s hard to see the RBA doing anything less than a double hike in August.

“Many families are already under pressure with skyrocketing grocery and gas costs. Sharp increases in mortgage payments, on top of this, could push some into the red.”

Carrying out previous branch closures, ANZ claimed that more and more customers were moving online and did not need regular in-branch banking services.
ANZ has made a dire prediction about interest rate hikes. (Nine)

The other big banks have made smaller predictions about where interest rates will end up by Christmas.

Commonwealth Bank, Westpac and NAB have forecast a cash rate of 2.60 percent for November.

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