More out-of-cycle rate hikes coming

HOME-LOAN customers are being warned they could be hit by further out-of-cycle rate hikes, adding more strain to household budgets.

Customers at ANZ and Westpac have already increased their variable rate loans (5.36 per cent and 5.38 per cent respectively) in recent weeks and the Commonwealth Bank will do the same, lifting rates by 0.15 percentage points to 5.37 per cent, on Thursday.

AMP Capital’s chief econ- omist Shane Oliver said the US central bank’s decision last week to hike rates for the third time in 2018 could impact Australian mortgage customers.

“If we continue to see interest rate hikes in the US that will put upwards pressure on global borrowing rates,” Dr Oliver said. “It could result in more out-of-cycle moves.”

The US central bank increased its benchmark lending rate by 0.25 percentage points to 2.25 per cent.

New analysis from financial comparison website RateCity found the recent hikes by three of the Big Four banks — excluding National Australia Bank — will squeeze more than $300 a year from household pockets.

Their database shows there are variable rate deals as low as 3.44 per cent and customers are being urged to hunt for cheaper deals.

A borrower with a $300,000 mortgage on a standard variable rate with a big bank could save more than $96,000 on a 30-year loan by switching to the cheapest deal.

Home Loan Experts’ managing director Otto Dargan said all owner-occupier customers paying principal and interest should have an interest rate under 4 per cent.

“If your rate is over 4 per cent then you should consider negotiating with your lender or refinancing,” he said.

The Reserve Bank of Australia board meets again tomorrow and it’s expected they will keep the cash rate on hold at 1.5 per cent.

The cash rate has not moved since August 2016.