ANZ group director for Australian retail Maile Carnegie highlighted the large number of borrowers ahead of their minimum repayments, in addition to the very high level of household deposits in recent years.
“While this change will affect customers in different ways, home loan customers are generally well placed to manage rising rates with about 70 percent of bills prepayments — many of them two years or more. Household and corporate deposits are also at record highs,” Carnegie said.
“However, we know that some people are struggling and we encourage ANZ home loan customers who are having issues to contact us so we can use a range of support options we have available,” said Carnegie.
Interest-rate comparison website RateCity said a 0.25 percentage point increase would increase repayments on a $500,000 loan by about $65 a month, or $130 a month for a $1 million mortgage.
Explaining Tuesday’s rate hike, RBA Governor Philip Lowe highlighted the strength in the labor market, arguing that wage growth was picking up, making it appropriate to add some of the extraordinary support provided during the pandemic. to pull.
Lowe said the RBA expected inflation to hit 6 percent this year with further rate hikes to follow. “The board is committed to doing whatever it takes to ensure inflation in Australia returns to target over time,” said Lowe.
In the longer term, Lowe said it was “not unreasonable” to expect the cash interest rate to rise to 2.5 percent, which he described as a more normal level for borrowing costs.
Australian banking stocks have performed strongly this year amid predictions that banks will benefit from rising interest rates by raising lending rates more than they raise rates on deposits.
At the time of writing, National Australia Bank had not announced any changes to interest rates.
Rating agency Standard & Poor’s said on Tuesday that mortgage interest deduction delinquencies are likely to rise from historically low levels due to the rise in interest rates, but did not expect a significant rise in mortgage defaults.
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