ANZ chief executive's dire warning for Australian home borrowers

ANZ chief executive Shayne Elliott has warned the bank is expecting more borrowers to struggle to repay their mortgage.

The Reserve Bank's 13 interest rate rises in 2022 and 2023 have seen borrowing costs escalate at the most aggressive pace in a generation.

Mr Elliott said he expected things to get worse, even if the level of mortgage defaults was still low. 

'Still, we expect the number of people under stress to increase somewhat,' he said on Tuesday, delivering ANZ's half-year results.

But Mr Elliott said most borrowers were coping, despite interest rates soaring at the most aggressive pace since the late 1980s.

'Despite the stress, there's still resilience and people are being very prudent in how they manage their money,' he said.

'The reality is that banks are in a really strong position to help those customers that do find themselves in a difficult position.'

The Reserve Bank is widely expected to leave interest rates on hold on Tuesday, with the futures market regarding an increase as an eight per cent chance. 

The cash rate is already at a 12-year high of 4.35 per cent but underlying measures of inflation stripping out volatile price movements are above 4 per cent - levels well above the RBA's 2 to 3 per cent target. 

This has seen the 30-day interbank futures market rule out any rate cut in 2024, and is instead expecting relief to be delayed until August 2025. 

Borrowers have already copped the most aggressive pace of monetary policy tightening since 1989, causing variable mortgage rates to soar by 68 per cent for home owners with a 20 per cent deposit.

ANZ's half-year net profit of $3.552billion for 2023-24 was 7 per cent weaker than the first half of 2022-23 - covering October to April.

The bank's financial year runs from October 1 to September 30, instead of the traditional July 1 to June 30 window.