Aussies brace for ‘stressful’ 10th rate rise

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A 60 minutes reporter interviewing Treasurer Jim Chalmers has dropped the f-bomb to describe the prospect of a return to 1990s interest rates.

Reporter Tom Steinfort stunned the Treasurer during Sunday night’s program when he used the swear word after this exchange.

“There’s absolutely no chance that interest rates will get to the level that they were at in the early 1990s,” Dr Chalmers said.

The reporter Steinfort declared in response: ‘We’re all f***ed if they do’.

“Is that going to get on the show?’ Dr Chalmers responded.

The interest rate in January 1990 peaked at a record high 17.5 per cent.

60 Minutes reporter Tom Steinfort. Picture: Nine60 Minutes reporter Tom Steinfort. Picture: NineTreasurer Jim Chalmers. Picture: NineTreasurer Jim Chalmers. Picture: Nine

The tense exchanges comes as homeowners prepare for the tenth consecutive rate hike on Tuesday in a move that is likely to deliver the highest interest rates in Australia in the last decade.

The RBA is tipped to deliver more bad medicine – and expected 0.25 percentage point interest rate rise – stop the nation’s inflation crisis and dampen spending.

It‘s the fastest monetary tightening that has been inflicted on homeowners by the RBA since it adopted an inflation target in 1993.

The RBA is set to increase the cash rate for a 10th consecutive time. Picture: NCA Newswire / Gaye GerardThe RBA is set to increase the cash rate for a 10th consecutive time. Picture: NCA Newswire / Gaye Gerard

ANZ chief executive Shayne Elliott is predicting the latest hikes will hit homeowners “much harder” as families start to really feel the pinch.

“It’s clearly going to be a lot more stressful (for borrowers) over the next six months than it has been over the last,‘’ he said.

Mr Elliott told The Australian that a lot of homeowners are also coming off fixed rate mortgages to be hit with steep variable rates.

“We think from here on rate rises are going to bite much harder because we are going to be over that buffer that we’ve already built in,‘’ he said.

“Cost-of-living pressures are going to start to bite even more.”

The current official cash rate determined by the central bank is 3.35 per cent but that is expected to rise to 3.6 per cent by Tuesday.

That’s the highest official cash rate since September, 2012 when rates hit 3.5 per cent.

For a household with a $500,000 mortgage it will deliver an extra $77 a month in payments according to ­RateCity.

But the true pain is evident when you consider the same family has been hit with extra payments of $980 a month, or $11,800 a year since May, 2022.

On a $750,000 mortgage, borrowers will be paying an extra $116 a month. That’s almost $1400 a month or $16,800 a year.

Westpac recently joined the other major banks in forecasting a peak rate to 4.1 per cent. That would mean another two rate rises beyond Tuesday’s expected rate increase.

Treasurer Jim Chalmers is asking businesses to pass on the costs responsibly. Picture Lachie MillardTreasurer Jim Chalmers is asking businesses to pass on the costs responsibly. Picture Lachie Millard

As cost of living pressures grow, Treasurer Jim Chalmers said consumers should not have to pay unjustifiable price increases.

“We should be making sure that businesses aren’t gouging in an inflationary environment,” he said.

“It’s not that long ago that people from this lectern were always talking about how we’re all in this together.

“We do need to make sure that the price rises that businesses are asking their customers to pay are justified, and justifiable.”

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Dr Chalmers said inflation stressed that workers‘ wages were not the problem.

“If anything, one of the problems for the best part of a decade is that wages growth has been too stagnant,‘’ he said.

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