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How Australia faces a SUPER-SIZED interest rate spike in fresh hell for homeowners | WATCH

PHOTO: Mortgage interest rates are set to climb. FILE

  • Deutsche Bank is forecasting a super-sized 0.75 percentage point rate increase
  • Prediction for August would mark biggest monthly surge since December 1994
  • The larger than usual interest rate hike would hurt struggling home borrowers
  • Canada this week increased its official cash rate by one whole percentage point
  • Chief economist Phil O’Donaghoe said outside chance of bigger Australian rise

Australian borrowers face the biggest monthly interest rate rise in nearly 30 years – a super-sized increase of 75 basis points – as inflation worsens but it could be even bigger after Canada raised rates by a whole percentage point.

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Deutsche Bank is expecting the Reserve Bank of Australia in August to hike the cash rate by 0.75 percentage points at the beginning of August, which would be the biggest monthly increase since 1994.

Should this prediction come true, a borrower with an average $600,000 mortgage would see their monthly repayments soar by $256 as cost of living pressures intensify.

This would be the fourth consecutive monthly rate rise since May, and would mean a $654 surge in monthly variable mortgage repayments in just three months as rates climb at the fastest pace in 28 years.

The lowest jobless rate in 48 years also increases the risk of a wage-price spiral, with Australian inflation tipped to surge at levels unseen since 1990.

Australian borrowers face the biggest monthly interest rate rise in three decades as inflation worsens with unemployment now at a fresh 48-year low. Deutsche Bank is expecting the Reserve Bank in August to hike the cash rate by 0.75 percentage points, which would be the biggest monthly increase since 1994

Australian borrowers face the biggest monthly interest rate rise in three decades as inflation worsens with unemployment now at a fresh 48-year low. Deutsche Bank is expecting the Reserve Bank in August to hike the cash rate by 0.75 percentage points, which would be the biggest monthly increase since 1994

Why a 0.75 percentage point rate rise is a big deal

A 0.75 percentage point interest rate rise in August would be the biggest monthly increase since December 1994

Canada has this week increased interest rates by one percentage point – taking the cash rate to 2.5 per cent, the same as New Zealand’s

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Before latest rise, Canadian borrowers this year had endured 1.25 percentage points of increases – the same as Australia

Canadian interest rates went up by 0.25 per cent points in March, 0.5 percentage points in April, 0.5 percentage points in June and 1 percentage point in July to 2.5 per cent

Australian interest rates went up by 0.25 percentage points in May, 0.25 percentage points in June and by 0.5 percentage points in July to 1.35 per cent

New Zealand interest rates went up by 0.25 percentage points in October 2021, 0.25 percentage points in November, 0.25 percentage points in February, 0.5 percentage points in April, 0.5 percentage points in May and 0.5 percentage points in July to 2.5 per cent

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