RBA interest rates live updates: Michele Bullock’s board set to hike to 15-year high to rein in inflation

Lenders - pardon the pun - bank on a mortgageholder’s complacency.

The hassle of phoning your bank and going round after round to squeeze just a 25 basis-point cut out of them seems more a chore than an exercise in saving a few dollars.

But those few dollars add up. Take a look at this from Canstar ...

Its research shows an owner-occupier who took out a new mortgage five years ago and hasn’t renegotiated their loan since, will land on a variable rate of 7.18 per cent if the RBA hikes today and their bank passes it on in full.

By switching to a highly competitive rate of 6.24 per cent, this borrower, assuming they have $600,000 remaining on their loan, could potentially save over $10,000 in the next two years, even when factoring in $1150 in switch costs, says Canstar.

With property sales falling, banks are again scrambling to not only find new customers, but also hold on to the ones they have.

The banks aren’t losing money in this rate hike cycle.

Don’t let yourself pay a loyalty tax without them having to earn your business.

With or without a hike today, a simple phone call could keep your family’s head above water.

As painful as just one more rate hike would be today, homeowners fear the Reserve Bank could still tighten the screws further.

ANZ economist Sophia Angala said persistent underlying inflation and the re-escalation of the conflict in the Middle East and higher oil prices had increased the risk of follow-up rate hikes.

“As a result, we expect the RBA to raise the cash rate by 25bp in both September and November 2026,” Ms Angala said.

Money-saving expert Joel Gibson said economists’ predictions would be a painful blow for households who had already exhausted ways to cut back their spending.

“We’re in uncharted territory now if we get any more rate hikes because it hasn’t been this high since I think 2011,” Mr Gibson said.

“There’s a whole iteration of borrowers who’ve never seen rates this high.

“A lot of people are already at their limit in terms of what they can possibly find to cut their spending, to save money wherever possible.

“But if rates keep going up, some people unfortunately just won’t be able to afford their mortgage.”

While financial markets are pricing in a 90 per cent chance the Reserve Bank will hike today, one expert says is a certainty if the central bank wants to maintiain its credibility.

RBC BlueBay Asset Management portfolio manager Malin Rosengren the RBA held rates unchanged in August on the concession that if any upside risks to inflation materialised they will have to respond.

“July inflation data indicate both headline and trimmed-mean inflation remain elevated and show signs of strong momentum and widening breadth, and household spending continue to boom,” Mr Rosengren said.

“While there was a modest loosening in the labor market, it doesn’t seem to be enough to soften demand.

“At this point it should appear evident to the RBA that policy is not yet restrictive enough.

“If they fail to hike at the September meeting the market will turn to price in more inflation premia across the curve as the bank’s credibility will be tarnished.”

If you’re looking for someone to blame for your soaring mortgage and petrol costs, look no further than Donald Trump and his war with Iran.

That’s the message this morning from Treasurer Jim Chalmers who has diverted criticism away from Labor Government spending to the crisis in the Middle East.

“Obviously, people are already under very substantial pressure, and an interest rate rise would add to the pressure that a lot of Australians are feeling,” Dr Chalmers told the ABC.

“From my point of view, from the Government’s point of view, we recognise the independence of the Reserve Bank, and we’re focused, on our part, in the fight against inflation, which is to manage the Budget responsibly, provide cost-of-living relief in an ongoing way, and also to deal with some of these longer-term challenges in our economy.”

During his appearance, he blamed inflation rates, in part, on conflict in the Middle East.

UNSW economics professor Richard Holden told ABC radio that Dr Chalmers was sidestepping responsibility for inflation.

“To blame this rate rise or potentially next month’s rate rise on what’s going on in the Middle East is just wrong,” he said.

“That is the Treasurer gaslighting Australians.”

A hike in the official cash rate today to 4.6 per cent will take homeowners back 15 years to 2011.

Back then, according to figures from banking watchdog the Australian Prudential Regulation Authority, the total value of residential mortgages was $1.05 trillion.

Today, it’s $2.51tr.

A 25 basis-point will add $91 to the monthly repayments for a borrower with a $600,000 loan and 25 years remaining at the start of this year’s hikes, says comparison site Canstar.

However, across what would be four hikes for the year, that’s an increase of $364 to monthly repayments and over $500 extra a month for anyone with $825,000 debt or more, again assumes 25 years remaining, Canstar says.

If banks pass on a hike today in full, it will push the average owner-occupier variable rate to 6.49 per cent.

Canstar says that’s when you need to start crunching the numbers, shopping around for a better deal and calling you’re bank to negotiate.