Millions of Australian mortgage holders hit by rate pain today after major banks pass on interest rate hikes

Millions of Australians are about to feel the pinch as interest on mortgage rates rise from Friday. The RBA’s decision last Tuesday to lift the cash rate up another 25 basis points, from 3.85 to 4.10 per cent is about to hit every variable rate mortgage holder in the country. Borrowers are typically given 10-days between when the Reserve Bank of Australia announces an interest rate hike and when the banks pass them onto consumers. As of Friday this period is over, with Commonwealth Bank, National Australia Bank and ANZ will all pay a further 25 basis points on their mortgages. Westpac variable mortgage customers will see their rates rise on Tuesday (31 March). When all four big banks’ new rates are in effect, Westpac will offer the lowest advertised variable rate out of the majors at 5.74 per cent, while NAB and ANZ’s lowest variable rates are now in the 6s. Canstar data insight Sally Tindall says variable borrowers across the country are now having to brace for the second cash rate hike in as many months. “Make no mistake, banks are starting to charge customers higher rates from today, but be aware there’s a significant delay between today and when that extra money comes out of your bank account, for those paying the minimum, she said. While interest rates are on the rise, how much customers pay may not start for another 10 days. Commonwealth Bank will lift minimum repayments after 20 days of the rate hike, while Westpac, NAB and ANZ are giving customers 30 days notice. According to Canstar Commonwealth Bank and National Australia Bank have also lifted their fixed rate offerings. As a result of these changes, NAB no longer offers a fixed rate starting with a ‘5’. NAB’s variable rates start from 6.01 per cent, while CBA’s lowest offering is 6.34 per cent. Westpac now offers the lowest fixed rate out of the majors at 5.79 per cent for a 1-year term, however, Canstar warns this rate could rise. More pain still to come for borrowers Mortgage holders could be in for further interest rate pain as the central bank is forced to lift interest rates back to their highest level since the global financial crisis. In a grim warning, IG market analyst Tony Sycamore says money markets are now forecasting 67 basis points of Reserve Bank rate hikes between now and the end of the year. This is due to both domestic pressures and rising oil costs which are pushing up Australia’s inflation rate. “This aligns closely with expectations for three more 25-basis-point increases this year, a path that would take the RBA’s cash rate to 4.85 per cent – a level we haven’t seen in 17 years, dating all the way back to November 2008,” Mr Sycamore said. Treasurer Jim Chalmers also previously flagged that could push inflation above 5 per cent. MLC senior economist Bob Cunneen warns budgets will be hit by a double whammy of rising costs and a lift in interest rates. “There is a prospect of Australia recording 5 per cent annual inflation over coming months given that Brent crude oil prices at $US103 ($A148) and Australian petrol prices above $2.40 per litre are set to jolt consumer prices higher,” he said. “Accordingly, another 0.25 per cent interest rate rise by the RBA is the most likely prospect in May given the soaring trajectory of Australia’s inflation rate.” Ms Tindall says mortgage holders should be bracing for higher rates in the months ahead. “If you’ve got a mortgage, work out what your repayments might look like if rates rose not just in May but again later in the year.” Ms Tindall said. “You want to make sure this figure fits in your budget alongside the other rising cost-of-living pressures.” “Customers seriously considering fixing may need to act sooner rather than later. While this kind of decision should not be taken lightly, and not without proper research, the clock is ticking on competitive fixed offers.