 Interest rate hikes?
Fresh concerns that interest rates could rise this year have been voiced by some economists this week.
The Reserve Bank of Australia is expected to hold official interest rates at current levels at their policy meeting tomorrow and all 18 economists surveyed by AAP said the RBA would keep it at a 49-year low of 3 per cent for a fifth straight month. However many are being cautious and warning that this trend of holding rates may not last long.
Macquarie interest rate strategist Rory Robertson said the RBA may increase rates sooner than expected and home owners should be prepared for the rate rises.
National Australia Bank chief economist Alan Oster said two 25-basis-point rate rises could be made in November and December, with another in February.
"Although there is no doubt that much of the strength in current conditions is a symptom of significant government stimulus, consumer and business sentiment has improved sharply of late," Mr Oster said.
The RBA has been hinting that the Australian economy is coping better than expected and the next few months will be an interesting time.
Some fixed rate loans have already been increased and variable rates could be next in the firing line.
If rates on loans increased 2 per cent the average 5.37 per cent mortgage would rise to 7.37 per cent. That would increase repayments on a $300,000 loan from $1819 to $2191 a month.
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