Monthly repayments could rise by 49% in total, if NAB’s forecast is realised

The average mortgage holder could end up paying a total of $1,135 extra in monthly repayments since the start of the hikes, if NAB’s new cash rate forecast is realised.

NAB’s economic team is now predicting a further three RBA hikes in the next three months, taking the cash rate to a peak of 4.10 per cent by May.

If this happens, the average variable borrower with a $500,000 debt at the start of the hikes could see their repayments rise by an extra $227 per month in the next three months, and a total of $1,135 extra per month since the start of the hikes – a 49 per cent increase in just over a year.

Impact of rate hikes if the cash rate gets to 4.10%

Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining. Starting rate is the RBA avg. existing owner-occupier variable rate of 2.86% in April 2022 and assumes NAB’s cash rate forecast.

Big four bank forecasts: how high will the cash rate go and when?

• CBA: +0.25% point hikes in Mar and Apr, peaking at 3.85%. -0.25% cuts in Nov and Dec ‘23, and Feb and May ‘24.
• Westpac: +0.25% point hikes in Mar and May, peaking at 3.85%. -0.25% cuts in Feb, May, Aug and Nov ‘24.
• NAB: +0.25% point hikes in Mar, Apr and May, peaking at 4.10%. -0.25% cuts in Feb, Mar, Apr and May ’24.
• ANZ: +0.25% point hikes in Mar and May, peaking at 3.85%. One -0.25% cut in Nov ‘24.

RateCity.com.au research director, Sally Tindall, said: “The cash rate could hit 4.1 per cent, and quickly, if NAB’s latest forecast is realised, taking it to the highest level since April 2012.”

“If this happens, the average borrower who hasn’t renegotiated their rate recently could be looking at a 49 per cent increase to their monthly repayments in the space of just over one year,” she said.

“Forget about bill shock on your energy invoice or at the supermarket – that’s an almost 50 per cent rise to what is typically a household’s biggest recurring expense.

“While a cash rate of 4.10 per cent is by no means a done deal, it’s something borrowers should start preparing for.

“If you’ve got a mortgage, ask your bank what your monthly repayments will be if your interest rate rises by a further 0.75 percentage points. That’s the number you could need to fit in your budget by May. 

“NAB has joined CBA, Westpac and ANZ in forecasting a series of cash rate cuts just months after the peak, however, any such relief is not guaranteed.

“No-one knows for certain what the cash rate will do over the next 12 to 18 months, however, a bit of prudent planning ahead of time will give you the confidence that you’ve got this, come what may,” she said.

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