ANZ group executive for Australian retail Maile Carnegie highlighted the large number of borrowers who were ahead of their minimum repayments, alongside the very high level of household deposits amassed in recent years.
“While this change will impact customers in different ways, home loan customers are generally well placed to manage rising rates with around 70 per cent of accounts ahead on repayments – many of them by two years or more. Household and business deposits are also at record highs,” Carnegie said.
“However, we know some people are doing it tough and we encourage any ANZ home loan customers facing difficulty to contact us so we can work through a range of support options we have available,” Carnegie said.
Interest rate comparison website RateCity said a 0.25 percentage point increase would lift repayments on a $500,000 loan by about $65 a month, or $130 a month for a $1 million mortgage.
Explaining Tuesday’s rate rise, RBA governor Philip Lowe highlighted the strength in the labour market and argued wage growth was picking up, which made it appropriate to withdraw some of the extraordinary support provided during the pandemic.
Lowe said the RBA expected inflation would hit 6 per cent this year, and there would be more interest rate rises to come. “The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time,” Lowe said.
Over the longer term, Lowe said it was “not unreasonable” to expect the cash rate would increase to 2.5 per cent, which he described as a more normal level for borrowing costs.
Australian bank shares have performed strongly this year amid predictions banks will benefit from rising interest rates by lifting rates on loans by more than they increase rates on their deposits.
At the time of writing National Australia Bank had not announced any changes to interest rates.
Ratings agency Standard & Poor’s on Tuesday said home loan arrears were likely to drift up from historically low levels following the increase in interest rates, but it did not expect a significant lift in mortgage defaults.
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