Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments
Monthly repayments could soon cost borrowers a lot more cash if Westpac’s predictions for rate rises do come to fruit...
Australians’ opinions are split on the prospect of interest rate movements in 2013, research by financial institution CUA shows.
The annual CUA National Mortgage Survey: Expectations and Intentions, which looks at the nation’s expectations regarding interest rates and mortgages, found that Australians are polarised over the likely direction of the RBA’s interest rate decisions this year.
Key findings from the report show that 53 per cent of Australians believe official interest rates will stay on hold at the RBA board meeting in February, while 31 per cent say rates will decrease and 15 per cent think there will be an increase.
If rates are cut in February, 79 per cent of variable mortgage holders will most likely make extra repayments towards their home loan, while 32 per cent will consider spending on discretionary goods and just 20 per cent will consider investing in shares.
As for the rest of the year, Australians are evenly split on their forecasts. 38 per cent believe rates will increase over the remainder of 2013, while 37 per cent believe they will decrease.
The survey also found that Australians remain opposed to fixing their rate, with only seven per cent of variable rate mortgage holders planning to fix their rate in the next three months, while 71 per cent would not fix their rate at all.
Meanwhile, 86 per cent of mortgage holders with a big four bank would switch or consider switching lenders for an interest rate 0.5 per cent below their current lender.
CUA’s general manager of products and marketing, Jason Murray, said “The research reveals that while the majority of Australians believe rates will stay on hold following the RBA’s first meeting this year, opinions are split on the outlook for interest rates in 2013 and are equally divided between those thinking rates will increase to those that think they will decrease.
“Despite the RBA’s efforts to stimulate the economy with rate cuts, it appears that if the RBA cuts the rate in February, Australians will look to make smart financial decisions,” he said.
Mortgages are loans that are used to buy homes and other real estate where the property itself serves as collateral for the loan.
Mortgages are loans that are used to buy homes and other real estates where the property itself serves as collateral for the loan.