Morning Report Monday 27 July 2015
Home Loan Rates are Rising as Official RBA Rates are Falling
All markets move in cycles, including interest rates. Occasionally we have to stand back and look at the long term picture to realise exactly where we are today. Interest rates are at all-time historically low levels, today’s 2% Official RBA Cash Rate looks as much as extreme to the ~17% rates in the early 1990’s – see chart 1. Investors should be very wary, assuming that the current very low level of rates will continue indefinitely. As readers know, we expect at least one more cut in Australian interest rates, but this may not be enjoyed by the recently lucky mortage payers on variable rates.
• Last week, both ANZ and CBA raised interest rates by 0.27% on property investors, other banks are likely to follow.
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