The RBA again left interest rates on hold at the historic low of 1.5%, but that hasn’t stopped lenders pushing through out-of-cycle rate hikes.
Heritage Bank is the most recent bank to hike, joining Bank of Queensland, the beleaguered AMP, Auswide and IMB in raising variable home loan interest rates in the last weeks of June, according to a finance industry comparison website.
Angus Raine, Executive Chairman of Raine & Horne, recommended that if a borrower has a loan interest rate starting with a 4 or 5, then it might be time to shop around. “The lenders have been pushing through out-of-cycle rate hikes for the past decade, and with a plethora of lenders to choose from, it might be worth shopping around for a cheaper mortgage.”
As for the long-term direction for the official cash rate, Dr. Shane Oliver, Head of Investment Strategy and Chief Economist, AMP Capital, urged the RBA to avoid calls to raise interest rates prematurely just “so it could “prepare households for higher global rates.” Shane commented, “Such a move would be Iike shooting yourself in the foot in order to practice going to the hospital.”
The AMP economist also recommended the RBA against messing with the inflation target of 2-3%, on average, over time, which has served Australia well. He added, “We don’t see it doing either and continue to see interest rates on hold out to 2020 at least and can’t rule out the next move in rates being a cut.
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