Westpac issues a chilling WARNING to Aussie homeowners

PHOTO: FILE

Westpac’s CEO, Peter King, cautioned that borrowers may face prolonged high interest rates, with the Reserve Bank of Australia’s cash rate already at a 12-year peak of 4.35 percent. New inflation figures for the March quarter have led economists to reconsider the likelihood of rate reductions in late 2024, and there are concerns about the potential for an increase.

“Inflation has receded, but achieving the target range remains challenging both globally and in Australia,” stated King on Monday. “It seems probable that interest rates will remain elevated for an extended period.”

King noted an increase in mortgage repayment challenges among Westpac’s borrowers, attributed to 13 interest rate hikes in 2022 and 2023, along with the expiration of the low and middle-income tax offset in June 2022. This offset previously provided up to $1,500 to 10 million Australians earning up to $126,000.

Westpac’s chief executive Peter King has warned borrowers interest rates could stay higher for longer

“While stress levels in our loan portfolios have risen, this is unsurprising given the significant rise in interest rates, inflation, and taxation,” he remarked. “We are adequately provisioned and possess a robust balance sheet, enabling us to support our customers effectively.”

His remarks came as Westpac disclosed a 16 percent decline in its half-year net profit for 2023-24 compared to the same period in 2022-23, covering July to December.

The Reserve Bank of Australia cash rate is already at a 12-year high of 4.35 per cent. But new inflation data for the March quarter has made economists rethink the prospect of rate cuts in late 2024 (pictured is a stock image)

King also highlighted the potential for further inflationary pressure due to the Hamas-Israel conflict and Russia’s invasion of Ukraine, with petrol prices rising by 8.1 percent over the year, reaching $2.30 per liter for unleaded fuel.

“The global economy is also confronting potential challenges,” he added, emphasizing the ongoing economic risks stemming from geopolitical conflicts and uncertainties in the Middle East and Europe.