Interest rates are expected to rise to their highest point since December 2014 when the Reserve Bank of Australia’s board meets on Tuesday.
If the RBA raises rates by half a percentage point, as expected, it will be the fifth month in a row that interest rates have risen and take the benchmark rate to 2.35 percent.
This decision by the RBA would likely have significant consequences for Australians with a mortgage.
The 0.5 percent increase could push monthly home loan repayments to $144 for the average variable rate borrower, assuming banks pass on the full amount.
For the average borrower, it would mean an increase of more than $600 in monthly repayments from May.
The likely decision comes as the Greens at the weekend called on RBA governor Phillip Lower to put interest rates on hold, saying Australians had been “misled” by Mr Lowe when he said he was rates unlikely to rise until 2024.
“Hundreds of thousands of people were driven into massive debt on this basis,” Greens economics spokesman Nick McKim said.
But there was relief in some sectors of the economy, with a major Australian bank this week unveiling an interest rate change aimed at benefiting new customers.
CommBank cut the interest rate on top-up home loans for new borrowers, meaning homeowners could save up to 0.1 per cent.
It is the second time CommBank has reduced its variable rate for new customers since rate rises began in May.
In a statement, CommBank said it “continually reviews our interest rates to ensure they remain competitive and meet customer needs”.
Read related topics: Bank of reserves