Interest Rates

Interest rates are returning to their normal rate.

At the beginning of the year the Cash Rate set by the Reserve Bank was at an all time low of 3% as part of the overall stimulus package to stave off unemployment and recession.

As the economy did not go as deep as first thought, the Reserve Bank was always going to lift rates. Last November (2009) a Cash Rate for the later part of 2010 was tipped to return to 5%. At the half way mark of 2010 we now see the Cash Rate at 4.50% - two rate moves from the predicted increase.

The question now remains whether rates will go any further.

There are signs of retail growth slowing; the stimulus money has been spent, real estate sales are slowing, new building starts are slow, the First Homebuyer is no longer the driving force for the market.

The cost of funds for equipment finance and car finance has been reduced which is a guide that interest rates may in fact fall.

download page as pdf