Huge issue for Aussie mortgages looming

SCOTT Morrison says cost of living pressures are going on “all around the world” after Australia’s big four banks warned interest rates could rise four times in the second half of the year.

The surprise decision by the Reserve Bank of Australia earlier this week to abandon its “patient” approach to monetary policy – brought about by the Covid-19 pandemic – has prompted a revision of forecasts.

Inflation pressures are to blame, but t the burden is on the Prime Minister and Opposition Leader Anthony Albanese to convince voters they can keep cost of living pressures under control ahead of next month’s poll.

Westpac and NAB, alongside the Commonwealth Bank and ANZ are now predicting the first interest rate rise since November 2010 will occur on June 7, two months ahead of schedule.

They expect the official cash rate to increase from 0.1 per cent to at least 0.25 per cent before peaking at two per cent next year in a move that could add hundreds of dollars to mortgage repayments each month.

It had previously been expected the RBA would hold the cash rate at the record low until 2024, but inflation pressures in part caused by the war in Ukraine and low unemployment has changed the situation.

With the election to be called any day now, Mr Morrison said “strong financial management” in the years ahead was going to be key.

“There are lots of pressures on the Australian economy... That’s going on all around the world,” Mr Morrison told 3AW radio on Friday.

“That’s why strong financial management in the years ahead is going to mean more than anything, and we’ve had a steady hand on those issues. “

Earlier, Defence Minister Peter Dutton acknowledged the looming impact on people’s mortgages, and used it as a pitch to re-vote the Coalition back in.