The Reserve Bank (RBA) has increased interest rates by 0.25 of a percent (25 basis points) taking the official cash rate to 3.25%. This is the first time rates have gone up since March 2008.
Strong retail sales, rising consumer confidence and a rebound on share markets worldwide has the RBA at the ready to lift rates.
”Economic conditions in Australia have been stronger than expected and measures of confidence have recovered,” Glenn Stevens, governor of the RBA said.
”The global economy is resuming growth, with economic policy settings likely to remain expansionary for some time, the recovery will likely continue during 2010 and forecasts are being revised higher.”
”Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets.”
The central bank does not want the economy’s overall health to be threatened by underlying inflation or unsustainable borrowing activity, which can be triggered by low rates.
Following the announcement all four of the big banks – Commonwealth Bank, Westpac, National Australia Bank and ANZ – said they have placed their variable interest rates under review. CBA, NAB, and ANZ all have today passed on the 0.25% increase which means an increase of $40 per month to the average monthly payment for the typical $300,000 mortgage. The extra cost may stretch some household budgets at a time when unemployment remains on the rise.
Analysts say that more increases are on the way, with many predicting the official interest rate could be as high as 4.0% to 4.5% by the end of next year.
Mortgage holders, if they have not already done so, need to prepare for the predicted increase in rates.
To find out how to prepare for the coming increases, call Plan Assist on 02 9449 2333 to speak to our Loan Advisor team.
