Borrowers planning to take out a home loan in the coming months can expect steady interest rates, although the Reserve Bank is likely to raise rates twice before the end of the year.

Speaking to the Herald Sun, several leading economists anticipated that rates could tighten in the third quarter of the year.

UBS strategist Matthew Johnson and HSBC chief economist Paul Bloxham both think that two rate rises are likely before 2012 as the country continues to recover from the natural disasters at the beginning of the year.

“They’re getting back to talking about the Australian economy, the terms of trade boom, lots of investment – this means we need higher rates and that’s the story,” Mr Johnson commented.

The current base rate has remained at 4.75 per cent since November last year – a move largely applauded by economists across the country.

Steady interest rates could boost the number of Australian home loan applications made in the coming months, the chief economist of Master Builders Australia commented earlier in April.

Peter Jones explained that if the Reserve Bank of Australia allowed for “an extended pause” to keep rates steady, the building industry would continue to regain momentum.

 

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