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Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments

By Noemi Pamintuan-Jara 22 January 2022 | 1 minute read

Monthly repayments could soon cost borrowers a lot more cash if Westpac’s predictions for rate rises do come to fruition.

Westpac forecasts higher interests rates

Bill Evans, the bank’s senior economist, has forecast that the cash rate could rise up to 1.75 per cent by March 2024.

He expects the first interest rate hike to take place as early as August 2022, when the cash rate will climb to 0.25 per cent from 0.1 per cent, followed by a subsequent increase to 0.5 per cent in October.

If Westpac’s predictions are indeed correct, by the end of October, the average variable rate borrower with a mortgage balance of $500,000, who has 25 years left on their loan and with the principal paid off during this period, could see their monthly payments climb by at least $103 per month.

Giving home owners a heads-up, RateCity’s research director Sally Tindall has asked mortgage holders to anticipate higher borrowing costs and to expect the worst-case scenario.

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“While the exact timing of the next cash rate hike is still not certain, borrowers need to know that rates are on the rise – it’s just a matter of when,” said Ms Tindall.

However, the Reserve Bank of Australia has remained firm on its stance that the cash rate will not rise until at least 2023.

Impact of forecast cash rate hikes on average variable rate borrower, October 2022

Balance owing

Repayments today

Repayments - October 2022

Difference

$500,000

$2,366

$2,469

$103

$750,000

$3,549

$3,703

$154

$1m

$4,732

$4,938

$206

Note: Based on an owner-occupier paying principal and interest on the average existing customer variable rate of 2.98 per cent and 25 years remaining. Loan size is based on the amount owing in January 2022. Rate hikes are based on Westpac forecasts published 20.01.22.

Impact of forecast cash rate hikes on average variable rate borrower, March 2024 

Balance owing

Repayments today

Repayments - March 2024

Difference

$500,000

$2,366

$2,793

$427

$750,000

$3,549

$4,190

$641

$1M

$4,732

$5,586

$854

Note: Based on an owner-occupier paying principal and interest on the average existing customer variable rate of 2.98 per cent and 25 years remaining. Loan size is based on the amount owing in Jan 2022. Rate hikes are based on Westpac forecasts published 20.01.22. Assumes rate hikes in 2023 and 2024 occur at the end of each quarter.

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About the author

Noemi Pamintuan-jara

Noemi Pamintuan-jara

Noemi is a journalist for Smart Property Investment and Real Estate Business. She has extensive experience writing for business, health, and education industries. Noemi is a contributing author of an abstract published by the American Public Health Association, and Best Practices in Emergency Pedagogical Methods in Germany. She shares ownership of the copyright of an instructional video for pharmacists when communicating with deaf patients. She attended De La Salle University where she obtained a double degree in Psychology and Marketing... Read more



Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments
Westpac forecasts higher interests rates
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