RBA lifts interest rate to 4.25%
April 6, 2010
Australian mortgage holders will have to dig deeper for their repayments after the Reserve Bank board decided today to lift interest rates by 0.25 per cent.
The increase will be of little surprise to mortgage holders, who have been bracing themselves for a higher interest bill after repeated warnings by the Reserve Bank Governor, Glenn Stevens, that rates are on their way up. Todays 25 basis point rise takes the official rate to 4.25 per cent.
“This is now the fifth increase since September and means average Australian mortgage holders are now paying about $250 a month extra for their mortgages than they were in the middle of last year,” says Domain.com.au blogger and property writer Carolyn Boyd. “The property market has been running hot and the Reserve Bank will be hoping that todays increase will take a little bit of that momentum away”
The rate has many more rises to go before it reaches the most recent peak of 7.25 per cent, which it hit two years ago, in March 2008.
Until todays decision, mortgage holders on variable interest rates were paying about 6.75 per cent to their banks. The rates that borrowers pay to their financial institutions are expected to normalize at about 7.5 per cent to 7.75 per cent by years end.