How many more interest rate hikes do we have left?

The Reserve Bank of Australia is expected to hike the cash rate next Tuesday at its November Board meeting; the seventh consecutive hike in a row. Millions of Australian homeowners must be wondering how many more interest rate hikes they can reasonably expect to pay. 

The big bank predictions: how many rate hikes are left

According to the big four banks, we’re not out of the woods yet. Although the good news is that there may only be a handful of hikes left to go.

• CommBank – 2 hikes left, stopping by December 2022
• Westpac – 4 hikes left, stopping by March 2023
• NAB – 4 hikes left, stopping by March 2023
• ANZ – 5 hikes left, stopping by May 2023

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Cash rate hikes - based on big four bank predictions

Note: Accurate as of 27/10/22.

The most conservative forecast comes from CBA, with economists predicting only two 25-basis point hikes left for the year. After this point, it predicts we could see rates fall again as early as August 2023. 

Westpac is the only big four bank that has predicted another 50-basis point hike in November. After this double hike, the latest forecasting suggests we may see three more 25-basis point hikes. The next cut to the cash rate is predicted to come in February 2024.

NAB has also tipped two more 25-basis point cash rate hikes for 2022, with a final two increases occurring in February and March 2023. NAB Group economists have suggested the cash rate may remain steady at its predicted peak of 3.60% for some time. 

The largest amount of back-to-back cash rate hike predictions comes from ANZ. The bank has suggested we could expect five more 25-basis point hikes, with two more in 2022, then three more between February and May 2023. After this point, ANZ has forecast that rates could fall again by August 2024.

What to do if you’re struggling to repay your mortgage

RateCity crunched the numbers on Westpac’s latest cash rate predictions. The research found that compared to April 2022, when the RBA’s average ongoing owner-occupier rate was 2.86%, borrowers on a 25-year $500,000 home loan could be paying $1,075 more in monthly repayments in March 2023.

 How much more you may pay by 2023

Source: RBA average owner-occupier variable rate for existing customers, April 2022. RateCity.com.au. Note: Based on a 25-year, $500k home loan, comparing repayments with RBA average rate in April of 2.86%, versus a 375 basis point increase from continuous cash rate hikes to Westpac's predicted peak of 3.85% in March 2023. Does not factor in fees.

This is understandably a shockingly large increase in monthly mortgage repayments in just a year. When paired with the latest cost-of-living pressures thanks to annual inflation hitting 7.3%, you may be struggling to maintain your mortgage repayments.

If this sounds familiar, it may be worth considering the following:

1. Speak to your lender – If you are in serious financial stress and stretched past the point where you can afford your repayments; speak up. Call your lender and let them know you’re struggling. They may have hardship policies and payment plans they can assist you with, so you do not risk defaulting on your loan.  
2. Make extra repayments – If you have some wiggle room in your budget, and a mortgage that allows for extra repayments, consider chipping away at your principal owing now. Reducing your loan amount may help to lower your repayments and the amount of interest you pay overtime.
3. Ask for a lower rate – Lenders generally offer new customers lower interest rates in an effort to entice them on to their books. If you’ve been a customer for some time, it may be worth picking up the phone and asking your lender to match these rates. You can use our helpful negotiation script as well.
4. Consider refinancing – If you’ve been paying down your mortgage for some time and have built up equity, and that equity has not been affected too severely by recent property price falls, you may be in a position to consider refinancing. Switching to a lower-rate lender may help you to give yourself a rate cut in an era of rising rates.

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