Rates rise adds $40 to mortgage

BUNDABERG business owner Annette Saunders greeted news of another interest rate rise yesterday with a sigh of resignation.

The Reserve Bank of Australia increased interest rates by 25 basis points, to 3.75 per cent — making it the third rise in as many months.

“When you hear it, you just think ‘here we go again’,” Mrs Saunders said.

She expects her business loan to increase by about $40 a month, and counts herself lucky that she does not have a mortgage as well.

Wide Bay Australia managing director Ron Hancock said it would add about $40 per month to the average Bundaberg mortgage of $200,000.

“But it didn’t come unexpectedly, so most people should be able to handle it,” Mr Hancock said.

Greg Leahy, Suncorp regional general manager for Bundaberg, said while homeowners would be hit in the hip pocket, it was good for business and employment because interest rates rises signalled a strengthening economy.

“The resilience of the Australian economy and the fact that the global economy is showing signs of growth have influenced the Reserve Bank’s decision to increase the official rate,” Mr Leahy said.

“Unemployment has stabilised, business and consumer confidence has strengthened and retail spending is up.”

While interest rates will be on hold until the Reserve Bank’s next meeting in February, Mr Leahy said the upward trend would continue.

“As the economy strengthens over the next 12 months I believe interest rates will continue to rise until they reach a normalised rate of between four and five per cent,” he said.

“Australia’s economy is in much better shape than 12 months ago and I’m optimistic it will continue to improve in the new year.”

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