Economists heralded that the current condition of home owners being spared from another interest rate increase this month is only for a short time.

The official interest rate increase will be at 5.75 percent which equals to an extra amount of $200 monthly repayments on the usual $300,000 home loan. Experts accounted that this is in result of Reserve Bank’s attempt to manage Australia’s patchwork economy.
Economist Roland Randall said the Reserve Bank shall start with the interest rate increase in the succeeding months. "We expect the first hike to come in August, followed by another in November and probably another 50 basis-points in 2012 before interest rates reach the peak,'' he added.

Reports show that rising wages in the booming mining sector threaten to push up the cost of living for all Australian households. This will just add up to the latter’s struggles on price increases for groceries, petrol and utilities.

In spite of this, rising interest rates would mean bigger mortgage repayments for home-owners when consumers are feeling the pinch and housing affordability is hitting record lows.

Banking analyst Victor German shared said the major banks were unlikely to supersize their mortgage rate increases when the Reserve Bank next raised interest rates. This works positively for the homeowners.

"Bank funding costs are not going up and that means they're not as pressured to continue raising rates on mortgages. At the same time there has also been enough political pressure on the back of the previous rate rise,'' German detailed.