Experts predict cash rate will rise to 4%

After a sustained period of holding the cash rate at a record low, experts are predicting the RBA will increase the cash rate by 150 basis points to 4% in 2015

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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.

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