Thursday, September 23, 2010

Mortgage repayments to go up

Mortgage repayments for an average mortgage holder could go up by as much as $90 per month if the RBA and the banks commence interest rate revision as expected.

There is a general expectation in the industry that if RBA increases the rates within a month or two, this will not preclude the banks from also lifting the rates independently.

Analysts believe the big banks will be keen to boost mortgage rates under the pretex of an increase in the base rate.

But buyers of fridges, washing machines, flat screen TVs, computers, video games, appliances and furniture will be able to enjoy bargains as the Aussie dollar soars.

While the RBA board is expected to raise the cash rate by 0.25 percentage points when it meets early next month, analysts forecast that banks could lift mortgage rates by up to 0.45 percentage points.

That would add about $90 a month to repayments on a $300,000 mortgage.

Despite enjoying multi-billion dollar profits, Australia’s big banks face growing funding costs due to strong competition for credit in global markets.

Rate rises are expected to boost the value of our dollar even further after it yesterday broke through the US95c barrier for the first time in more than two years.

It comes as alarming the Urban Development Institute of Australia said Queensland was classed as substantially unaffordable and another small interest rate hike could close the door on another 20,000 homebuyers.

In the meantime CommSec economist Savanth Sebastian said shoppers could expect a Christmas discount frenzy as import costs continued to crash.

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