Finance guru Mark Bouris’s chilling warning to Australia over interest rates

Financial expert Mark Bouris predicts more pain for home loan borrowers as the Reserve Bank meets again in Sydney on Tuesday.

In another blow to mortgage holders, financial expert Mark Bouris predicts the Reserve Bank of Australia will raise the cash rate when it meets in Sydney on Tuesday.

In a video posted on Instagram, Mr Bouris and economist Stephen Koukoulas predicted the RBA would again increase interest rates, in more bad news for home loan borrowers.

The official cash rate sits at 4.10 per cent after June’s meeting, when the RBA raised the rate for the 12th time in 13 meetings.

Westpac, NAB and ANZ economists forecast rate rises on Tuesday and again in August, while CBA thinks the RBA board will keep rates on hold in July before a rise in August.

Mark Bouris. Picture: Instagram

Stephen Koukoulas. Picture: Instagram

“The only reason I say it is because Michelle Bullock’s [deputy governor, Reserve Bank] paper, out last Tuesday, talked about unemployment at four and a half per cent,” Mr Bouris said.

“Unless we see an unemployment [figure] with a four in front of it, I think they’re going to put rates up again. I think that’s their indicator.”

With the unemployment rate currently at 3.5 per cent, a one per cent rise would mean about 140,000 losing their jobs.

“That’s 140,000 people, the MCG plus, full of people who currently have a job who won’t have a job by the time the RBA is finished,” Mr Koukoulas said.

He added that the RBA has a “bee in their bonnet” about the labour market.

The official cash rate sits at 4.10 per cent after June’s meeting when the RBA raised the rate for the 12th time in 13 meetings. Picture: NCA NewsWire / Damian Shaw

Mr Bouris believes more hikes could see financially stretched mortgage holders offload homes in a “fire sale”.

The prediction comes as the world’s central bank urged more interest rate hikes, arguing the world economy is at a crucial point as countries struggle to rein in inflation.

The Bank for International Settlements (BIS), the umbrella body over central banks, says governments across the world need to “stay on course”.

“The global economy is at a critical juncture. Stern challenges must be addressed,” BIS general manager Agustin Carstens said in a speech launching the organisation’s annual report over the weekend.

“The time to obsessively pursue short term growth is past. Monetary policy must now restore price stability. Fiscal policy must consolidate.”

Mr Bouris believes more hikes could see financially stretched mortgage holders offload homes in a ‘fire sale’. Picture: Supplied

Borrowers to fall off a mortgage cliff

Borrowers coming off fixed rates risk falling off a mortgage cliff as their repayments skyrocket.

Many are expected to absorb the full increase in the cash rate that’s occurred over the past year, a figure that will increase their repayments by up to 63 per cent according to Canstar. Those who took on a two-year fixed loan rate in 2021 at the rock bottom 2.21 per cent rate offered by banks at the time could see repayments on a $500,000 loan rise by $1200 to $3101 per month based on the average variable rate of 6.57 per cent.

It’s a similar scenario for those who chose a three-year rate in 2020 when the average rate was 2.61 per cent.

They face a 53 per cent increase in their repayments taking the monthly commitment on a $500,000 loan from $2004 to $3074.

The RBA estimates that half of all fixed-rate home loans will expire this year, worth an estimated $350 billion.

-with Eli Green, NCA Newswire

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