Three of the big four banks raised their variable mortgage rates after the central bank’s decision to raise the official exchange rate.
Commonwealth Bank, NAB and ANZ all moved on Wednesday to raise rates by 0.5%, fully passing on the latest interest rate hike from the Reserve Bank of Australia.
The RBA on Tuesday lifted the official exchange rate from 0.85% to 1.35% in its third consecutive hike.
Bank interest rate hikes take effect July 15.
Westpac is the latest of the Big Four lenders yet to pass on higher interest rates, but is expected to follow suit.
For Commonwealth Bank customers, the standard variable rate for homeowner loans will increase to 5.9%.
ANZ said the 0.5% increase would increase monthly repayments by $119 on an average home loan of $450,000 for a homeowner paying principal and interest.
It also announced that it would increase the subsidized interest rate on some of its savings accounts by 0.5%.
Further rate hikes expected
Home loan comparison service RateCity said the hike would add $137 per month to a $500,000 mortgage, or $499 per month to a $750,000 loan.
The RBA also signaled further rises, with some economists expecting the cash rate to hit 3.5% next year.
The central bank is using rate hikes to bring inflation back to its target range of 2-3%.
“The board is committed to doing what is necessary to ensure inflation in Australia returns to target over time,” RBA Governor Phillip Lowe said in a post-decision statement.
Inflation is at 5.1% and should head towards 7% this year.
Treasurer Jim Chalmers warned Wednesday of tougher economic times ahead.
“It’s going to be an incredibly tough time for people, they should prepare for high and rising inflation and rising interest rates, unfortunately,” he told ABC Radio.
“But things will get better. The Reserve Bank expects inflation to moderate next year. It will come back to more normal levels, obviously that will be a big release for people.”
Mr Chalmers is expected to provide an economic update when the Federal Parliament resumes at the end of the month, before presenting his first budget in October.
“The budget will focus solely on implementing an economic plan, which includes things like investing in skills, cleaner and cheaper energy, and more affordable childcare,” he said. he declared.
“If you are the treasurer of a new government, you have to focus on the things you can influence.
“The constraints we have in our economy have been building up for the best part of a decade.”
The Treasurer said that even if Australia were not to go into recession, there could be economic consequences if that happened in the United States.
“They have higher inflation, and they have a central bank that’s going to have to do a lot of work to try to contain that inflation,” Chalmers said.