“Scrambling”: Why Your Home Loan Could Cost $ 21,000 More. Source: Getty

Australian homeowners could pay an additional $ 20,993 over the life of their loan if banks decide to increase variable mortgage rates in 2021, new data shows.

More than half of experts and economists surveyed by Finder believe banks will raise variable rates on home loans next year, despite Reserve Bank of Australia predicting that the official treasury rate will remain at 0.25% for the foreseeable future.

When asked when Australians can expect banks to take the plunge, half of those polled said banks are likely to announce out-of-cycle rate hikes in the first half of 2021.

“Bank profits have taken a nosedive after billions of dollars in loan deferrals, declining first-time buyers, low interest rates and minimal credit growth,” said Graham Cooke, head of Finder Insights .

“This can cause banks to scramble to recoup lost funds by raising mortgage rates to absorb some of these costs, which will hurt mortgage customers.”

Homebuyers considering a variable mortgage should consider a 2-3 percent repayment increase in their budget, Cooke said.

The average interest rate on all variable products in the market is currently 4.06%, which means that on a loan of $ 400,000, a 25 basis point increase could cost around $ 58 per month, or $ 20,993 over 30 years.

On the same loan, a 50 basis point increase could cost Australians over $ 117 more per month, or $ 42,302 over 30 years.

If your loan is around $ 700,000, an increase of 25 basis points could allow you to pay an additional $ 102 per month, or $ 36,736 over 30 years.

That figure rises to $ 206 per month if banks increase rates by 50 basis points, or $ 74,027 over 30 years.

When will interest rates go up?

Majority of pundits and economists predict another RBA take in September, claiming another cut would not be for several months – and a rise in interest rates is unlikely.

“For now, the RBA will remain on hold,” said Shane Oliver, AMP Capital economist.

“He considers that the monetary easing plan of March continues to help the economy and that the main action now concerns fiscal policy.

“There’s a good chance he’ll cut the cash rate to 0.1% and do more aggressive quantitative easing, but it wouldn’t be for several months.”

Bendigo Bank economist David Robertson said it was likely the RBA would not change rates for at least two years, and BIS Oxford Economics economist Sean Langcake said the cash rate would not increase until mid-end 2023.

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