Finance and share markets brace themselves for mortgage rate decision from the RBA tomorrow
23/01/2012 
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The Reserve Bank of Australia is widely expected to raise interest rates, though not all believe it will happen tomorrow.
Financial markets are on high alert for a rise in official interest rates as the Reserve Bank board prepares to meet today. These rates will flow on to mortgage home loans.
There is a high degree of expectation that Australia’s central bank will effectively raise mortgage interest rates, after stronger-than-expected recent readings on inflation, consumer spending, household and business borrowing, and residential building approvals.
The Australian Industry Group (AiG) says it is worried about the impact on more vulnerable households, industry sectors and states.
AiG chief executive Heather Ridout concedes the case for an increase has been made, but she has reservations.
“If you put up rates by 25 basis points, it’s not going to have much of an impact on Queensland and Western Australia where a lot of this boom time is coming from,” he said.
“But it will add to the burden in sectors, and in states, and in households that aren’t sharing all those gains.”
Last week, the Commonwealth Bank’s chief executive officer, Ralph Norris, said he did not believe the turbulence on US credit markets and global share markets would have much bearing on today’s Reserve Bank deliberations.
The head of Aussie Homes Loans, John Symond, was last week among the few to think the Reserve Bank would hold off.
“I think it is premature – it’s a very fine line that the RBA has to walk,” he said.
“It’s just not about housing. Exporters are copping a huge hit where the dollar is. There’s a lot of people and businesses still being impacted from the fallout of the drought.”
Today’s decision on rates will not be announced until Wednesday morning.
Source: ABC
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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