Australia Braces for Double Interest Rate Hit

Analysts predict another interest rate hike in Australia this month, which could lead to higher mortgage repayments for Aussies. The Reserve Bank of Australia (RBA) is expected to raise the cash rate from 4.35% to 4.60% on September 28-29. Economists forecast a 76% chance of this increase after recent cash rate rises undid the three rate cuts administered in 2025.

According to Canstar, a borrower with a $600,000 mortgage would pay an extra $92 per month if the cash rate rises to 4.60%. A further hike to 4.85% could see this figure rise by another $92 per month. Similarly, repayments on a $750,000 loan would increase by $230 per month if both hikes occur.

Westpac Chief Economist Luci Ellis said that money markets have rapidly shifted their expectations for interest rates amid stubborn inflation fueled by consumer demand. 'A rate hike in November is now fully priced in, with a significant chance it occurs in September, as well as some probability of a follow-up hike in the new year,' she said.

Westpac also warned that higher petrol prices could lead the RBA into assuming the economy is stronger than it really is. The latest Westpac-DataX Card Tracker report revealed that spending growth rose by 1.5% over the quarter, with up to half of this increase driven by rising fuel costs.

RBA deputy governor Andrew Hauser emphasized that the central bank would not hesitate to raise interest rates if needed to tame inflation, which has been above target for a long period.