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Q&A - Home loan interest rates

Everyone seems to be saying that home loan interest rates are going up and to expect a rate of 7% or more. Is this a foregone conclusion? Jason, Southport, QLD.

No but it’s a consensus opinion that rates will rise and the average cash rate, which goes with a neutral interest rate policy, is around 5%. That said it could take 2 to 5 years before that happens. Because our economy is doing so well, many expect it will be closer to two-three years but it could be quicker or slower and the health of the global recovery could determine it. If the world recovers in 2010 but drops back into recession in 2011, which some commentators say could happen, then interest rates here could actually fall. I suspect it won’t happen but the world is so precariously placed, it’s fair to ask: “Who knows?” 


Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.


Published on: Friday, September 25, 2009

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