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Australian consumers brace for higher rates: survey

06-11-2010 17:54 BJT

CANBERRA, June 11 (Xinhua) - Most homeowners still believe that higher interest rates have been on the way, despite the Reserve Bank of Australia (RBA) holding fire on an increase this month and saying rates are now "normal", survey revealed on Friday.

Westpac-Melbourne Institute consumer sentiment survey for June has found 90 percent of respondents expect more rate rises by June next year.

Just three percent expected a fall in that timeframe, while seven percent saw no change.

But most respondents, 46 percent, have been bracing for a cumulative rise of up to one percent over the next 12 months, this compares with an outright majority of 61 percent expecting an increase of over one percent when the question was last posed in February.

Westpac senior economist Matthew Hassan calculated that the spread of responses this time around equates to an average expected rise of 85 basis points over the next year.

This would lift the standard variable mortgage rate from 7.4 percent currently to 8.25 percent by June 2011, well above the average of 7.5 percent seen over the past 15 years.

"It would mark the biggest two-year rise in mortgage rates since 1989/90," Hassan said as he released the survey findings on Friday.

"Consumers remain much more hawkish on rates than the market."

Current pricing on financial markets has suggested a cumulative rate increase of just 25 basis points by June 2011, while Westpac itself was forecasting a 75 basis point increase over the same period.

Westpac is a multinational Financial services company and became the largest bank in Australia after it took over St. George Bank.

 

Editor:Du Xiaodan |Source: Xinhua

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