Further rate rises on the horizon?

Westpac Group is now expecting the Reserve Bank of Australia to raise the cash rate by 0.5 percentage points next week, taking it to a new 10-year high of 3.1 per cent. A half a percentage point rate rise on November 1 would see monthly repayments for a borrower with a $600,000 mortgage climb by $181 to $3,236.

The other major banks Commonwealth, ANZ and NAB are expecting a 0.25 percentage point rate rise on Melbourne Cup Day, but are now expecting further rate rises in 2023 than they had previously forecast.

The cash rate is currently 2.6 per cent. Westpac and ANZ see the RBA cash rate hitting 3.85 per cent next year, while Commonwealth Bank and NAB have a 3.1 per cent peak in their forecasts.

 

Fixed rates increasing

With rate forecasts changing, we’re seeing many banks increasing their fixed rates for owner occupier and investment lending. These increases range from 0.25-0.70%, are generally over shorter 1-3 years terms; the 4-5 year fixed terms are mostly unaffected.

The gap between variable and fixed rates is still high with most lenders, with some exceptions.

If you want to know more about this or a situation in particular, we’re here to help.

More options for casual clients

A major lender has recently updated their casual employment policy to increase the borrowing power for casual clients. With most lenders, casual income is annualised out over 40-48 weeks, depending on the type of employment. This new policy allows for casual income to be annualised over 52 weeks, which can make all the difference when maximising your borrowing capacity.

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