By Harish Sridharan

(Reuters] – The shares of Australia’s four largest banks tumbled on Thursday as fears about a market crash grew after the biggest rate hike by the central bank in 22 years occurred earlier in the week.

These fears have been growing as home prices snapped an impressive 20-month streak of winning in May, amid rising rates.

Kerry Craig at JP Morgan, global market strategist, stated that “Locally the banks are being under pressure by the excessive rate hike from RBA (Reserve Bank of Australia), and the prospects this will weigh too heavy on the housing market market and their profitability.”

The market, however, is skepticism about households’ ability to withstand higher servicing costs, due to the high levels of household leverage that Australia has seen.

The benchmark index fell between 2.6% to 3.7% at the Commonwealth Bank of Australia, National Australia Bank (OTC) and Westpac.

To combat rising inflation, the RBA raised its cash rate 50 basis points on Tuesday. Investors believe rates will reach near 3% before 2022. This would make it one of the most stringent tightening programs ever recorded.

Major lenders in the country followed their lead and increased home loan variable interest rates 50 basis points annually.

The property sector will be affected by falling rates and an uncertain growth outlook. DeepData Analytics’ chief executive officer Mathan Somasundaram said that there is already a decline in prices and a weaker demand for loans.

Banks are able to reduce bad debt provision in order to increase profits. These trends are expected to change.

Investors have also found bonds more attractive due to the rising interest rates. Australia’s 10-year bond yield reached its highest point in eight years.