INTEREST rates are expected to rise slowly to a cash rate of 4.5 per cent. What this means for you is that your variable rate is likely to increase by around 0.75 to 1 per cent; depending of course, on the banks keeping rate rises in line with the Reserve Bank of Australia. So the rate will probably end up around 1 per cent more than whatever you’re paying now by the end of the year.
The population is expected to grow and this will be driven by immigration and the baby boom (which I am contributing to). So reasonable rates and an increasing population should keep housing prices stable. The economy as a whole should experience modest growth due to the population growth and an anticipated housing and construction boom.
Savings patterns have changed in that people are saving a little bit more. In summary, everything should remain stable with modest growth and slightly higher interest rates.
These predictions could completely change if the credit instability from Europe re-emerges and affects world markets. I’m crossing my fingers and toes that this does not happen!
By Virginia Graham, www.modelmortgages.com.au.
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