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Date Published : Friday, February 15, 2008
Homeowners could be in for a good surprise after some of the biggest banks and financial institutions in Australia predicted variable interest rates on home loans to decrease earlier than expected.
Earlier this month, the Reserve Bank suggested it could be 2010 before the Australian economy sees a slowing of inflation rates and, in turn, the levels of variable rate home loans.
However, a number of banks have suggested that such a slowdown in inflation could occur later this year or early in 2009, with all of them offering cheaper rates for home loans fixed at two, three or five years.
National Australia Bank chief economist Alan Oster told the Herald Sun: "We still expect the easing cycle to begin in 2009 with rates to be cut by around 125 basis points to six per cent."
Michael Cant, Commonwealth Bank's head of retail products, suggested that it may take a bit longer than early 2009 for rates to start falling, but it will not be long afterwards.
"While the market is feeling upward rate pressures in the short term, the wholesale market is saying that rates are likely to come back in the next two to three years."
Earlier this month, the Reserve Bank of Australia increased interest rates for the third time in six months - a quarter of a pre cent to seven per cent. Interest rates set by the Reserve Bank are now at their highest level for 12 years.
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