Experts predict cash rate will rise to 4%

by Julia Corderoy01 Aug 2014
After a sustained period of holding the cash rate at a record low of 2.5%, experts are predicting the RBA will increase the cash rate by 150 basis points to 4% in 2015, according to the latest finder.com.au Reserve Bank survey.

The survey consists of 20 leading finance experts, of which 17 expect the cash rate to rise next year – with majority of them saying we should expect the increase in the first half of 2015.

Money expert at finder.com.au, Michelle Hutchison, said borrowers need to be cautious about the forecast. 

“Most of our experts believe the cash rate won’t reach the historical average of about 5%, but rather reach around 4%, which is 150 basis points above the current cash rate of 2.50%.

And with 17 out of the 20 respondents betting on rates to start their way up from next year, borrowers need to ensure they can afford the extra cost.” 

Hutchison is now urging borrowers to weigh up their options and make an informed decision now, while the cash rate is unanimously expected to remain on hold at 2.5% at the RBA’s meeting on the 5th of this month.

“Interest rate hikes are on the horizon and look set to start rising very soon, so borrowers need to start preparing now before it’s too late.”

Martin Parkinson, Treasury Secretary, expressed concern last week about the ramifications of an interest rate rise after historical lows causing such fierce competition in the mortgage lending market.

COMMENTS

  • by Coast Broker 1/08/2014 10:04:59 AM

    So we have experts predicting a large increase next year in the Cash Rate. I would call 150 basis points a large increase in the current period of low cash rates. However we are seeing further reductions in Lenders fixed rates. Who were these experts.

  • by BB 1/08/2014 10:50:47 AM

    how many time our 'Experts' were wrong? Just couple of days ago they were saying that interest rate will go down by end of the year and now they are saying that RBA will raise cash interest by 150 points next year. love to see that. ha ha ha

  • by Country Broker 1/08/2014 11:31:03 AM

    Oh Crystal Ball what do I see . After 30 years in this industry I have given up looking into the crystal ball to see what rates will do !

    I leave that to the Economists and the forecasters who history shows are between 30 to 50% accurate! I give the clients the fixed and variable rate options , with the facts and conditions of each option and let them make an informed decision.