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Time to factor interest rate rises into your budget equation

15 Apr 2014 Glynde 0 Comment

It’s been great while it’s lasted, but it seems the low interest rate party may soon be over, as economic forecasters begin to warn of a possible interest rate rise later this year. Some are ‘betting’ on an interest rate rise to coincide with Melbourne Cup day on the first Tuesday in November.

Interest rate rises are not great news for first home buyers, or people trying to get into a new home, but the flipside is good for those with money in term deposits or savings accounts.

While the April meeting of the Reserve Bank of Australia left interest rates unchanged at 2.5% and the RBA statement predicted the most prudent course was likely to be a period of stability in interest rates, five of 11 bank forecasters told finder.com.au they anticipated a rise before the end of the year.

Professionals SA CEO, Ted Piteo, said his advice to home buyers would be to factor rate rises in, and he said banks would also be factoring higher interest rates into the capacity of borrowers to repay.

“I think the fact that rates are being talked up is a reflection of consistent capital growth that property delivers. Increasing rates are actually a good sign for the Australian economy as a whole,” Mr Piteo said.


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