Rates Set to Rise – But what’s next?

Posted by nick on August 18, 2010 in Latest News with No Comments


It seems that tomorrows RBA meeting will see the cash rate rise.  With analysts being reported to have factored in a 50-60% chance of a rise. And this, at a time when the Bankers Association and Banking Executives are signaling…

that they will raise rates regardless of the RBA’s decisions. – It’s all a bit of cat and mouse, and no-one really knows, but the end result is that consumers with home loans will be paying higher rates.

What is also interesting is that there is talk from the RBA that they will manage inflationary pressure from the commodities (mining) boom through the use of rates, which has analysts predicting another rate rise before Christmas 2010 and possibly another four raises in rates next year. A somewhat confronting thought.

Ok, that could mean another 1.5% increase on loan rates between now and the end of next year. Which tells us our economy is strong and going well, but if inflation isn’t managed, and salaries aren’t adjusted, the cash in our pocket may not be anywhere near enough to handle the increased monthly repayment amounts on our loans. So some of us may need to make sure we are planning, or even locking rates, or hedging our bets with split loans.

With Shadow Treasurer Joe Hockey reminding us that standard variable rates have on average been higher, throughout the GFC than they were during the 10yr+ liberal reign, it might well be worth talking to your broker about the positives and risks associated with locking in loans, or split loan options, before rates start to creep right into the bottom of our pockets!

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Interest Rates in Australia

RBA Cash Rate:

1.50%

Next RBA meeting:

6/02/2018

Last months RBA Decision

- 0.00

RBA Rate Change last 12 mths:

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