RBA issues welcome relief
THE Reserve Bank’s unexpected decision to leave the interest rate unchanged yesterday was a momentary sigh of relief for Rockhampton home owner Kerrissa Hinchliffe.
Economists had widely expected the central bank to raise the cash rate of 3.75% by a further 25 basis points on top of its three consecutive moves late last year.
Ms Hinchliffe, a north Rockhampton resident, said despite the good news, she was concerned about expected rises later.
The Barkins sales assistant and her husband bought their family home in 2007 for $285,000 and have partly fixed, partly variable mortgage repayments.
“Our current fixed rate ends this October, so we’re worried about the new rate hikes,” the mother-of-two said.
At present the Hinchliffe family pays about $500 a week in mortgage repayments.
“We decided to keep some of the mortgage fixed because when we bought back in 2007 rates were on their way up,” Ms Hinchliffe said.
Reserve Bank governor Glenn Stevens said lenders had generally raised rates more than the cash rate in recent months and most loan rates had risen by close to a percentage point.
“Since information about the early impact of those changes is still limited, the board judged it appropriate to hold a steady setting of monetary policy for the time being,” he said.
To most borrowers rates remained lower than average, he said.
The managing director of Capricorn Investment Partners Limited, David French, said economic signs were mixed across the board, impacting the Reserve’s decision.
“There is strong employment growth, but the removal of the economic stimulus package has impacted on first-home buyers entering the market,” Mr French.
Mr French said the Reserve Bank would look at interest rates over the next few months to gauge economic growth.INTEREST RATES
- The cash rate will remain at 3.75%
- Economists expected a further 25 basis point rise.