Big four bank issues dire prediction for mortgage holders

Interest rates could rise another four times before Christmas, according to one of Australia's big four banks, painting a bleak picture for homeowners as cost of living pressures already squeeze the family budget.

ANZ on Tuesday predicted interest rates could rise by 50 basis points in August, September, October and November, which would leave the cash rate at 3.35 per cent.

That means the average Sydney mortgage holder could pay another $1300 per month.

What to do if you're struggling to make mortgage repayments

The dire prediction comes after the Reserve Bank of Australia (RBA) hiked the cash rate to 1.35 per cent earlier this month, its third increase of the year.

However, the ANZ prediction could be the minimum rise for rates, with minutes from the RBA's last meeting showing the board believes the cash rate is still well below where it should be.

"The level of interest rates was still very low for an economy with a tight labour market and facing a period of higher inflation," the minutes read.

"Members agreed that further steps would need to be taken to normalise monetary conditions in Australia over the months ahead."

Reserve Bank to announce new cash rate

RateCity.com.au research director Sally Tindall warned borrowers need to prepare themselves for significantly more rate pain.

"ANZ now believes the cash rate could hit 3.35 per cent by November – that would be a rise of 3.25 percentage points in the space of seven months," she said.

"With central banks hiking official rates around the world, it's difficult to see the RBA doing anything less than a double hike in August.

"Many families are already under the pump with skyrocketing grocery and petrol costs. Hefty increases to mortgage repayments, on top of this, could tip some into the red."

When making earlier branch closures, ANZ claimed more and more customers were moving online and did not need regular in-branch banking.