Most of Australia’s mortgaged homeowners are unlikely to see their loan repayments increase if interest rates rise this week.
Financial markets and most economists expect the Reserve Bank of Australia to lift the cash rate target from 3.6 per cent to 3.85 per cent on Tuesday.
Despite a potential rate hike, a large majority of the nation’s 3.3 million mortgage holders would not automatically face higher repayments. This is because many borrowers did not reduce their repayments during last year’s three interest rate cuts.
National Australia Bank said eight in 10 of its variable-rate mortgage customers did not lower their repayments during the cuts. Commonwealth Bank reported the figure was between 85 and 90 per cent.
ANZ has not disclosed how many customers adjusted repayments, while Westpac is the only major bank that automatically lowers repayments when rates fall, provided customers have opted to pay the minimum.
