The RBA has increased rates by a further 0.25 pts as the economy continues to improve and the bank eases back it’s stimulus program. While there had been some speculation that the rate rise could have been as large as 0.50 pts homeowners will be thankful of the reprieve with another rate rise now unlikely before Christmas.
Some sections of the media ran stories with homeowners saying that they felt tricked into buying a property when rates were at there lowest and the latest rate rise meant that they would struggle to keep up repayments. This is quite worrying. Anyone who thought that the low rates set at the worst of the GFC were sustainable has either been living under a rock or has received some spectacularly bad financial advice. The RBA has been quite clear in stating that rates will rise further as the economy continues to improve. any one currently looking to buy a home should factor in at least 1.0 of further interest rate increases to their loan repayments just to get back to “normal”. It would be wise to add 2.0 – 3.0 pts to current rates when considering whether you can afford the loan.