RBA Rates Decision – April 2010

Today the RBA announced it would increase interest rates a further 25 basis point to move the cash rate to 4.25%.  They are trying to take the heat out of the booming housing market, as a threat of a bubble is forming due to the historical low rates implemented during the GFC.   Yet our quick recovery out of the GFC to avoid recession has seen the clamps on surplus cash in one’s household to try to ensure we don’t have an inflationary impact on the economy down the track.  The RBA are seeking a more sustainable and measured growth phase, rather than a quickening ramping up and overcooking the economy.

We expect the banks to play fair and only pass on the RBA increase.  NAB/Homeside has already come out into the market and advised they will only be lifting rates as the RBA level earlier today.  This increase will once again tighten the household budget.  On a Mortgage of $300,000 this increase represents an increase in monthly interest of $62.50 per month or $750 per year.