Will rates rise again?

Published: June 20, 2008 - 01:05 PM

The Herald Sun has reported today that Warren Hogan, co-head of Australian economics and interest research with the ANZ bank, believes that interest rates could rise again in August.

Mr Hogan is forecasting a 1.3 per cent jump in the underlying inflation rate for the June quarter and is of the opinion that the recent “slow” employment figures are not enough to stop the Reserve Bank rising rates in August and possibly again in November. "The only thing stopping an August rate hike would be a much sharper decline in domestic growth indicators, or some event which reinforces a weaker growth outlook," Mr Hogan said in the Herald Sun.

David Power of ShopAround.com.au says that a further rate hike could be catastrophic for Australian homeowners. “A homeowner with a $300,000 30 year mortgage at 7.25% has already had an additional $342 added to their mortgage costs between March 2006 and March 2008.A further rate rise of 0.25% putting this mortgage rate up to 7.5% would add another $50 in mortgage costs to this persons outgoings per month. And there’s also the possibility that the major banks may increase their loan rate by more than an official rate rise.”

With consumers hit by rising petrol prices, grocery prices and electricity and gas costs rising as well, Australians are finding it harder than ever to make ends meet. Hardest hit are parents trying to support young families lower income earners and pensioners. Mr Power said "Many Australian families are finding it tough just to meet their basic living costs. But services like ShopAround.com.au that give consumers the opportunity to compare the best available deals for free can help householders control their budget and maybe leave some money spare to save for the future or take the family on a holiday."

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