The Reserve Bank is expected to increase interest rate tomorrow again, I hope again mortgage pressure on millions of Australian households whose monthly budgets are already under pressure.
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Australia Institute economist Richard Denniss predicted interest rates would rise between 0.25% and 0.4%, causing “a lot of pain” for many.
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Some economists think the RBA could be even more aggressive, hitting mortgagers with a 0.5% spike.
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For a $1 million 30-year mortgage, and RBA A 0.25% increase would increase monthly repayments by $131, while a 0.5% increase would result in a hefty $265.
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“The Reserve Bank has indicated that we will see higher interest rates over the next six to 12 months,” Denniss warned.
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“That means mortgage payments go up by thousands of dollars depending on the size of people’s mortgages.”
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Given recent spurts in inflation and rising food, gas and energy costs, Denniss said employers need to start raising wages now or the government needs to “step in and pass through”.
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“Previously the Reserve Bank said it wouldn’t raise interest rates until wages started to rise (but) that’s clearly not happening,” he said.
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“We see interest rates rising now and wages haven’t risen yet.”
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Employers needed to show “some willingness” to negotiate better wages or whether the government and the Fair Work Commission should consider intervening, he said.
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According to the latest CPI figures, vegetable prices increased by 6.6% in the first three months of the year†
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Fruit prices have increased by around 4.9% and a two-liter bottle of cola now costs 50% more.
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Last month, the Reserve Bank caught everyone off guard by: 25 basis point levy ratewhile a 15 point move was widely expected.
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The RBA will make its announcement tomorrow at 2:30 p.m. (AEST).
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