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Banking giant ANZ now expects borrowers to tackle four 50 basis point rate hikes in November – with the country’s major banks expecting cash rates to settle in 2023 once inflation is under control. The Big Four on Tuesday forecast the Reserve Bank of Australia’s cash rate would more than double from an existing three-year high of 1.35 percent to a 10-year high of 3.35 percent on Melbourne Cup Day. ANZ chief economist David Plank expects the RBA to raise interest rates by 0.5 percentage points in a row in August, September, October and November – and keep rates at that level throughout 2023 and 2024. “We think the RBA will take its cash rate target to a tight setting above three percent by the end of 2022, more than 12 months earlier than our previous estimate,” he said. A two percentage point increase in mortgage rates in November would leave borrowers with an average $600,000 mortgage owed $708 more a month in payments as the RBA cash rate hit its highest level since October 2012. But

Hi, over there. It’s Monday, July 18th and you’re reading The Loop, today’s news summary. Brisbane-based banking and insurance company Suncorp has accepted ANZ’s $4.9 billion offer to take over its banking operations — but the deal will take at least 12 months before the deal is finalized, and has several hurdles to work through in the meantime. ANZ is now tasked with raising an additional $3.5 billion in funds to pay for the deal, and will need approval from the Australian Competition and Consumer Commission (ACCC) and Federal Treasurer Jim Chalmers. Queensland State Financial Institutions and the Metway Incorporation laws also need to be amended for the takeover to proceed. Provided the deal gets the green light, it would make ANZ Australia’s third-largest bank for home loans, according to analysis from RateCity (using APRA data). The next step is for ANZ to submit a merger authorization application to the ACCC, which is expected to be received by the regulatory body next month. The

Australians are still spending big bucks, but surveys suggest that could change quickly as rising interest rates send consumer confidence to pandemic lows. Key points: Consumer confidence has fallen to the lows usually seen during a recession Soaring inflation and a sudden spike in interest rates to combat it weigh on households The slump in confidence has yet to feed through spending cuts, with various measures hitting record highs The latest consumer spending data from the Australian Bureau of Statistics showed household spending was 7.9 per cent higher in May than a year earlier. Much of the increase in spending is not because Australians have had to buy more, but reflects a spike in inflation, meaning people are paying more for most of the things they buy. Transportation spending rose nearly 15 percent, as people once again took to the skies, but also as fuel costs soared. Eating out and going out together has also seen a double-digit percentage increase in spending over the past y