Australia Raises Interest Rate To 4.25%

[DisQ]

4th rise since October, bonkers!!!

what are they trying to do, kill the housing market!!

It must not be allowed.

a yummy 4.25% every savers dream.

could it would it happen here???

Australia raises interest rate to 4.25%

By Peter Smith in Sydney

Australias central bank underlined its determination to reduce monetary stimulus on Tuesday when it lifted its benchmark interest rate from 4 to 4.25 per cent, its fifth such rise since October.

In an upbeat assessment of the countrys outlook, the Reserve Bank of Australia indicated growth this year would be around a trend of 3.25 to 3.5 per cent and inflation during the same period would be close to its 2 to 3 per cent target range.

http://www.ft.com

Edited June 7, 2010 by DisQ

[Patfig]

That sounds dangerously responsible

[DisQ]

That sounds dangerously responsible

I know, but I may have been duped as its a bit old news see the link below

(I am in Asia at the mo & got excited reading it, a bit naughty of ft, just to get registration me think)

http://www.ft.com/home/asia#

though rates will rise in the uk sooner than many realise, pressure is on.

[aussieboy]

I know, but I may have been duped as its a bit old news see the link below

(I am in Asia at the mo & got excited reading it, a bit naughty of ft, just to get registration me think)

http://www.ft.com/home/asia#

though rates will rise in the uk sooner than many realise, pressure is on.

Quite - this was all pre-Greece. Rates were held last week.

[aa3]

4.25% we can't even conceive of that here lol!

[Frank Hovis]

That sounds dangerously responsible

Who the hell do they think they are? If financial meltdown is good enough for Britain then it should be good enough for the colonials.

[blue skies]

Ready for a fall

June 7, 2010 - 12:53PM

Rates are on hold but the housing fire could already be out.

THE Reserve Bank decided to keep interest rates on hold during the week, much to the relief of many a home owner, citing concerns about European economies along with satisfaction with current inflation levels.

"Consistent with that outlook, and as a result of actions at previous meetings, interest rates to borrowers are around their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago," Governor Glenn Stevens said.

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But the damage to the housing market could already have been done, with some signs of moderation already emerging.

The RP Data Rismark Hedonic Home Value Index released last week showed signs of softening in April, rising by just 0.2 per cent over the month, after 16 months of strong gains. A graph of the index's rolling quarterly capital gains highlights a distinct pull-back in April after a peak in December.

Interest rates have jumped from 3 per cent to 4.5 per cent in as little as eight months. Unsurprisingly, that has had an impact on the number of loans approved, with housing finance falling for six consecutive months. After dropping a cumulative 14 per cent from October to March, housing finance is now at its lowest level since February 2009.

The majority of this fall is due to owner-occupiers pulling out of the market - down by 24 per cent - as the first home owner's grant was reduced, while investors rose 9 per cent.

The argument for why Australia didn't experience the collapse in property prices seen in the US and other parts of the world has always been that the supply of accommodation here was limited while the demand continued to grow. The stronger lending practices of our banks are another factor. We didn't have as many loans going to property buyers who obviously couldn't afford to pay them back. The NINJA loan (no income, no job and no assets) was non-existent here.

But international commentators rightly point out that it is rare for bubbles in any kind of market not to burst.

The renowned value investor and founder of global investment management company GMO, Jeremy Grantham, says both the British and Australian housing markets should decline by about 40 per cent. If they don't, he says, it will be the first time in history that a bubble has not behaved in such a way.

We should be fortunate enough to avoid a property crash of the magnitude of that in the US but prices in any market rarely go only in one direction. They do fall, so don't be surprised if property values start to soften.

[Guest The Relaxation Suite]

Seems far too low, doesnt it.

I presume this will have a positive effect on Australia's insane housing bubble. Also in Australian news, Rudd dropping in the polls like a sofa pushed off a towerblock and Abbott getting more popular by the day. Says he will reinstate the Pacific Solution.

[righttoleech]

This is horrific. Does this mean they could be suffering the nightmare scenario where savers can make a real return? I feel ill. The imprudent should be cosseted from the cradle to the grave.

[interestrateripoff]

If there's a housing crash in Australia they'll be coming down....

[the flying pig]

...But the damage to the housing market could already have been done, with some signs of moderation already emerging.

The RP Data Rismark Hedonic Home Value Index released last week showed signs of softening in April, rising by just 0.2 per cent over the month, after 16 months of strong gains. A graph of the index's rolling quarterly capital gains highlights a distinct pull-back in April after a peak in December....

Nooooo - not moderation in, er, 'price growth'... won't someone think of the little old ladies for whom pwoperdee is their pension etc...

[Dorkins]

When there's a housing crash in Australia they'll be coming down....

Fixed for you. Bailing out debtors is the name of the game in every country on Earth, why would Australia be any different?

[Bloo Loo]

4.25% we can't even conceive of that here lol!

unless you want a business loan, a car loan or a mortgage. And running up credit??? your eyes would boil.

[DisQ]

unless you want a business loan, a car loan or a mortgage. And running up credit??? your eyes would boil.

yep, even credit cards average around eye watering 16% to 26%.

lets see how long they can hold.

[Ruffneck]

the aussie dollar is still dropping

down to 81US now

i'm thinking of trading in some of my gold , have made a reasonable profit since i picked it up 5 months ago

[Alan B'Stard MP]

Last time I looked the RBA rate was 4.50%.