Homeowners warned to expect at least two further rate hikes as repayments soar

Homeowners have been warned to brace for a double whammy of interest rate rises on Tuesday and again in August, with total monthly repayments expected to be driven at least $333 higher on the latest predictions.

Markets and economists are tipping a 50 basis point increase when the Reserve Bank meets on Tuesday, lifting the official cash rate from 0.85% to 1.35%, with further rises expected throughout 2022.

The RBA has responded by lifting the cash rate from the emergency levels of 0.1% set in November 2020, with a flurry of rate rises during election season in May, again in June and another expected on Tuesday.

According to interest rate comparison service RateCity, the May and June rises and a further 0.5% increase in July will lift the monthly repayments on a $500,000 loan by $333.

Households that have borrowed $750,000 will be paying $499 more a month, and a loan of $1m will cost $665 more a month.

The RBA will then be guided by global developments and the inflation outlook, including the June quarter inflation result out at the end of July, he said.

Koukoulas said a month ago he had tipped the cash rate to reach as high as 3.5% in this cycle, but has now scaled that back to 3%.