Why your mortgage repayments could be $500 more by 2023

It’s hard to budget for the future without a crystal ball, but thankfully RateCity has crunched the numbers on big four bank cash rate hike predictions to determine how much more borrowers could be paying in mortgage repayments by 2023.

Financial experts and the big four banks have been forecasting a Reserve Bank of Australia cash rate hike for some time now, with increases of up to 2.15 percentage points expected.

RateCity research has explored these predictions to discover just how much some mortgage holders may end up paying in monthly repayments if they come true.

How much more mortgage customers could pay by 2023

Economists from all the big four banks have updated their forecasts to assume the first of several cash rate hikes will occur in June.

Forecast cash rate hikes: big four banks

• CBA: hikes to start in June. Cash rate to reach 1.25% by February 2023.
• Westpac: hikes to start in June. Cash rate to reach 2.00% by June 2023.
• NAB: hikes to start in June. Cash rate to reach 2.25% by August 2024.
• ANZ: hikes to start in June. Cash rate to reach 2.00% by November 2023 and peak above 3.00%, but not until sometime after 2023.

While their ongoing hike predictions still differ, it’s clear that the big banks expect that interest rate increases will be here for the foreseeable future.

But in terms of your household budget, how much more could homeowners be paying in mortgage repayments over this time frame?

RateCity research shows that for an owner-occupier borrower with a $500,000 25-year mortgage paying the lowest variable interest rate (principal and interest), these interest rate hikes could see them paying almost $500 a month more by the end of 2023.

Source: RateCity.com.au

Note: Based on hypothetical 25-year, $500k home loan. Based on big four bank cash rate predictions, assuming an initial 0.15% cash rate hike in June, then periodic 0.25% cash rate hikes every few months to meet the forecast target. Does not factor in fees.

For NAB, ANZ and Westpac customers, this may mean their mortgage repayments balloon to nearly $2,700. For CBA customers, this may mean their mortgage repayments increase to almost $2,500.

Cost of interest rate hikes for CommBank customers

CommBank has forecast an initial rate hike in June, with further rate hikes bringing the cash rate to 1.25% by February 2023.

If these interest rate hike predictions came to fruition, it may cost average customers $289 more a month in repayments.

Repayments on a 25-year, $500k mortgage after cash rate hikes

Cost of interest rate hikes for Westpac customers

Westpac has forecast an initial rate hike in June, with further rate hikes bringing the cash rate to 2.00% by June 2023.

If these interest rate hike predictions came to fruition, it may cost average customers $484 more a month in repayments.

Repayments on a 25-year, $500k mortgage after cash rate hikes

Cost of interest rate hikes for NAB customers

NAB has forecast an initial rate hike in June, with further rate hikes bringing the cash rate to 2.25% by August 2024.

If these interest rate hike predictions came to fruition, it may cost average customers $483 more a month in repayments.

Repayments on a 25-year, $500k mortgage after cash rate hikes

Cost of interest rate hikes for ANZ customers

NAB has forecast an initial rate hike in June, with further rate hikes bringing the cash rate to 2.00% by November 2024.

If these interest rate hike predictions came to fruition, it may cost average customers $484 more a month in repayments.

Repayments on a 25-year, $500k mortgage after cash rate hikes

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