<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Aussie borrowers have been warned to brace for a double-dose of interest rate pain as market instability fueled by the volatile war in the </span><a href="https://www.9news.com.au/middle-east" rel="" target="" title="Middle East "><span>Middle East</span></a><span> pushed three of the big banks to shift their </span><a href="https://www.9news.com.au/reserve-bank-australia" rel="" target="" title="RBA"><span>RBA</span></a><span> cash rate predictions.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>NAB, Commonwealth Bank and Westpac today both amended their interest rate predictions, now tipping the RBA to increase the official cash rate by 25 basis points when they meet next Tuesday, and again in May.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>That would bring the peak cash rate to 4.35 per cent.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/federal-politics-news-superannuation-tax-changes-to-become-law-support-greens/d1c2fa00-7d0e-4719-a39b-f9e3cfb7a487" target="_blank"><strong><span>Major superannuation changes to become law, with a push for further tax reform later this year</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The big banks initially expected the RBA to hold until May, which ANZ is still forecasting.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>If NAB, CBA and Westpac are correct, it would mean three back-to-back hikes after the cash rate jumped 25 basis points to 3.85 per cent on February 3.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>NAB said new upside pressure on inflation "tips the balance in favour of an additional increase".</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/finance/interest-rate-hhike-forecasts-reserve-bank-middle-east-big-four-banks/44a09939-1636-4509-9fdc-20f67f3eaa97" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The starting point of robust growth, a too-tight labour market and too-high inflation already supported further tightening," NAB said in a statement today.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE: </span></strong><a href="https://www.9news.com.au/national/panicked-buyers-empty-shelves-to-stockpile-jerry-cans-as-fuel-prices-surge/75f156f4-b974-418f-9f17-f7ac550f3051"><strong><span>Aussies could face $4400 fine over 'dangerous' jerry can act</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Much will depend on the trajectory of oil prices and the domestic data flow, and we see two-sided risks around our new central case for a 4.35 per cent peak."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Westpac said the effect of higher oil prices on inflation was "large but temporary" but believes the RBA will "nevertheless feel compelled to react".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"There are good arguments for staying on hold until May given the temporary nature of the shock and the possibility of more extreme market instability. A split vote at next week's meeting is possible," Westpac chief economist Luci Elli said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Market participants should allow for the possibility that the RBA opts to wait until May, but it is no longer our base case.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/allegra-spenders-bold-tax-plan-that-would-leave-every-australian-1643-richer/2c38a57d-dd09-48e5-b280-f34089829adf" rel="" target="" title="MP unveils bold tax plan to give every Australian an extra $1643 a year"><strong><span>MP unveils bold tax plan to give every Australian an extra $1643 a year</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Similarly, a swift and clear resolution of the war (and fall in oil prices) or a clear and sudden loss of momentum in domestic activity would mean that the expected March hike would not be followed up in May. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Again, this is not our base case, but we will keep the possibility under review."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Canstar data insights director Sally said a cash rate hike next week was "not a done deal".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The war in the Middle East has cast a huge cloud of uncertainty over the decision, because while the short-term impact of the conflict will push up prices, particularly fuel, the longer-term damage to the economy and jobs market is not yet clear," she said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"If the Westpac and NAB forecasts prove accurate, the RBA would deliver three back-to-back rate hikes across February, March and May – a scenario that would add further pressure to already stretched household budgets."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>For a borrower with a $600,000 mortgage on a 25-year term, a hike in March would increase their monthly repayments by $91.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE: </span></strong><a href="https://www.9news.com.au/national/iranian-football-players-senior-iranian-community-figure-says-more-footballers-seek-asylum/871406ab-bfe3-41ca-94aa-598f80eeeffe"><strong><span>Iran team member changes decision to stay in Australia</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>If rates were to rise again in May, which all four majors expect, the total increase would be $181 each month.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"These are big numbers and you're combining them with the end of the electricity rebate, rises in private health insurance premiums, rise in petrol prices," Tindall said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It will be breaking point for some families if we get those one, two, three, punch hikes."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Tindall encouraged borrowers to "stress-test" their budgets against at least half a percentage point higher.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"For example, if you're now sitting on a rate of 5.75 per cent, test it out at 6.25 per cent – even 6.50 per cent – to see if it stacks up against your budget," Tindall said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"For borrowers, the key message is to prepare for the possibility of higher rates, even if it's not yet a done deal. Now is the time to make sure your mortgage is competitive."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>NAB and Westpac both expect interest rates to begin to regress to neutral levels in the second half of 2027.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><em><strong><span>NEVER MISS A STORY:</span></strong></em><span> </span><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><em><strong><span>Download the 9NEWS App here via</span></strong></em><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" target="" title=""><em><strong><span>Apple</span></strong></em></a><span> </span><em><strong><span>and</span></strong></em><span> </span><a href="https://play.google.com/store/apps/details?id=nineNewsAlerts.nine.com&amp;hl=en_AU&amp;pli=1" target="" title=""><em><strong><span>Google Play</span></strong></em></a></li><li><em><strong><span>Make 9News your preferred source on Google by</span></strong></em><span> </span><a href="https://9.nine.com.au/8x987w" target="" title=""><em><strong><span>ticking this box here</span></strong></em></a></li><li><em><strong><span>Sign up to</span></strong></em><span> </span><a href="https://login.nine.com.au/edm?client_id=nineatnine" target="" title=""><em><strong><span>our breaking newsletter here</span></strong></em></a></li></ul></div></div>