RBA tipped to lift cash rate again at board meeting as mortgage cliff looms

The Reserve Bank is likely to give serious consideration to pausing interest rates for the first time since it began its record series of hikes, analysts say, but economists are still predicting an eighth consecutive increase when the board meets on Tuesday.

Another quarter-point rate rise, if passed on by commercial banks, would typically add $75 to monthly repayments for each $500,000 borrowed, RateCity said. The 300 basis point rise since May would swell monthly repayments by $834 for such a mortgage.

But limiting how hard the central bank will want to tighten monetary policy is the jump in repayments when fixed-rate loans expire.

RateCity estimates the total amount of fixed-rate loans expiring next year is at least $270bn.

Kristen Beadle, a liquidator and trustee at CPA Australia, said many businesses also faced the prospect of a surge in interest repayments as their fixed-rate loans expire in the coming years.

At a recent stakeholder meeting, one of the big four banks said as much as 70% of their loan book could switch from fixed to floating rates next year.

Those on interest repayments of 1.5%-1.9% would suddenly be on 5%-7% annual interest. Many businesses also have personal assets tied to their loans, Beadle said.