Century 21 Port Douglas Real Estate Australia believes that while today’s decision by the Reserve Bank of Australia to keep rates on hold at 4.75 per cent was appropriate for current economic conditions, home owners should prepare for a rate increase in the near term.
Given the substantial contraction seen in the economy over the March quarter, the Reserve Bank made the right decision to keep the cash rate steady in June,2011.
However the relatively strong overall position of the Australian economy points to a likely move by the Reserve Bank to lift rates before the year is out, which all mortgage holders should begin to prepare themselves for.
According to figures recently released by the Australian Bureau of Statistics, Australia’s gross domestic product dropped 1.2 per cent over the quarter to March 2011, largely due to the destruction of Australia’s commodity exports by the widespread natural disasters at the beginning of the year.
Despite the downturn, the economy looks to be on track with growth predictions for the labour force and continued strength in the mining sector placing upwards pressure on inflation and interest rates.
While we are certainly seeing some excellent buying opportunities in the current residential property market, home buyers and investors need to factor the possibility of increased rates into their purchase decision.
Current mortgage holders should also prepare to accommodate the pressures of increased interest payments into the household budget.