 Home loan rate increases
It seems the votes are in and the verdict is "expect interest rates to rise." Economists have long been saying rates will rise and now the RBA is confirming that this trend of low rates cannot last.
So can you afford an extra 2 per cent on your home loan interest rate? Because that is the prediction for rates. Current low interest rates have fuelled the housing market during the global financial crisis but these rates will rise, and probably by the end of 2009 or early 2010.
Rohan Gamble is the Founder and Managing Director of independent finance comparison website Mozo.com.au and he believes banks will lift rates soon.
My prediction is that it isn’t when the RBA next moves on rates that we need to worry about, it’s when the banks do, because I think they’ll be first. Regardless of when the RBA decides it’s time, I’ll place a $20 bet that the banks move before it does anyway.
Glenn Stevens, RBA governor, indicated that rates need to go back to “normal” levels, which he defined as “a good deal north of where the cash rate is now”.
5 per cent seems to be the average interest rate the RBA would aim for.
And it may be sooner than we think. No bank will want to be first, but one of them will go at some stage, and as soon as that happens, the one thing you can be completely sure of is that the rest will follow quickly. They act in unison - always have, always will.
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