Rates will rise 2% over 20 months: survey
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BN
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31/03/2010 12:00:00 AM
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Economists from leading financial services companies agree that the RBA will push interest rates back to near pre-GFC levels by the end of 2011.
The Australian Financial Review’s quarterly economic survey, published today, revealed that most economists believed the central bank would keep rates on hold in April, but start nudging them steadily upwards in May until the cash rate reached around 6% in 2011.
RBC Capital Markets warned that the current average home loan rate of 6.25% was well below the 10-year average of 7.25%. “We think the market continues to underestimate the magnitude of this tightening cycle,” said senior economist Su-Lin Ong.
Rising interest rates, however, will do little to slow capital growth in Australia’s housing stock.
NAB expects prices to rise 5–10% by the end of 2011, with severe undersupply, falling unemployment and rapid population growth more than compensating for rising interest rates.
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