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Date Published : Friday, February 01, 2008
Data released this week by the Reserve Bank of Australia has made it likely that the bank will raise interest rates this month, according to reports.
Figures from the bank released yesterday showed that credit provided to the financial sector rose by 1.1 per cent during December.
In addition, the Reserve Bank noted that over the course of 2007, total credit issued to the private sector by financial intermediaries rose by 16.5 per cent.
"We expect household appetite for credit to remain robust despite recent interest rate hikes," wrote Alex Joiner and Paul Braddick of ANZ, according to The Age. "In aggregate, household balance sheets remain solid, underpinned by strong asset growth."
A further rise could impact more on those firms looking to build new properties, as house prices and rental costs look set to rise along with the rate of interest.
The sale of new homes fell by 1.3 per cent in December in Australia, with the Housing Industry Association (HIA) predicting a "fifth straight year" of weakness in 2008.
"We did have two interest rate rises in the back-half of 2007, one in August and one in November," said Harley Dale, chief economist of the HIA, according to ABC News. "They no doubt had some dampening impact on new home sales in the latter part of 2007."
The current cash rate of interest is 6.75 per cent, following a 0.25 per cent rise in the rate in November last year. This is a more than ten-year high, according to data from the Reserve Bank's website.
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