Westpac expects to jack your mortgage up 6 times in 2 years

Posted: 27 January 2022 4:21 pm
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Find out why and how much it's likely to cost you.

And more importantly, is there anything you can do about it?

The short answer is yes. You can get in front of these predicted variable rate rises by locking your mortgage into a fixed rate loan, pronto.

But first, let's work out how much your mortgage could become, if Westpac's prediction does come true.

Home loan interest rates are already rising in 2022, but they're set to go even higher.

Westpac this month adjusted its forecast, now expecting the Reserve Bank of Australia (RBA) to start raising the cash rate in August. Previously, Westpac chief economist Bill Evans had tipped February 2023 as the earliest date for a rate hike.

Westpac is pointing to a whole host of reasons why rates are going to jump, including strengthening wages and higher than expected inflation. As a result, they're now predicting:

  • 0.15% rise in August 2022
  • 0.25% rise in October 2022
  • 0.25% rise in March 2023
  • 0.25% rise in June 2023
  • 0.25% rise in December 2023
  • 0.25% rise in March 2024

This would bring the official cash rate up from 0.1% at present to 1.5% in 2 years' time. This is a jump of 1.4% on what you're paying now.

So if these interest rate increases happen, and the banks pass on the increases in full (which they are likely to do) how much would you expect to pay for your home loan?

I ran the numbers on principal and interest mortgages:

Mortgage valueCurrent monthly repayment at 2%Future monthly repayment at 3.4%Difference per month/year
$300,000$1,109$1,331$222 / $2,664
$500,000$1,849$2,218$369 / $4,428
$750,000$2,773$3,327$554 / $6,648
$1,000,000$3,697$4,435$738 / $8,856

Source: Finder's home loan repayment calculator

Is it too late to lock in a low fixed rate?

No, but rates are rising.

Here are a few of the offers available right now. You can check out dozens more home loan offers on our fixed rate page.

1 - 1 of 1
$
years
Name Product Interest Rate (p.a.) Comp. Rate p.a. Fees Monthly Payment

Ubank Own Home Loan Fixed P&IHome 3Y Fixed≥ 20% Deposit

Ubank Own Home Loan Fixed
4.25%
2.96%
  • App: $0
  • Ongoing: $250 p.a.
$739
A competitive fixed rate loan from an online-only smart bank. Requires a 20% deposit.
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Compare up to 4 providers

I refinanced and locked in my home loan at a 3-year fixed rate late last year at 1.98%. It's since jumped to 2.59% with that bank, and I know other lenders are hiking their fixed rates too.

This means they're slightly higher than they were last year, but they're still going to be much cheaper than the repayments you'll make with a 3 at the front of your interest rate.

Moral of the story? If a fixed rate home loan suits your situation, lock it in as soon as possible. Check out the latest fixed rate home loan offers now.

Find the right home loan now

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