Home loan rate set to rise, experts warn

Economists are predicting that a fourth consecutive interest rate rise is on its way despite improving economic conditions.

With just a week to go before the Reserve Bank of Australia’s (RBA) February meeting, financial market betting on another 25 basis point rate increase is at 67 per cent, the Herald Sun reported.

The newspaper noted that despite clear signs of economic recovery in robust jobs numbers, rising house prices and solid retail sales, economists believe that the RBA is set on another rate rise as it seeks to stabilise the financial markets.

Annette Beacher, a senior strategist at TD Securities, added that inflation figures released this week could affect the scale of the rise.

"As always, it is the outlook for inflation that will take the RBA’s foot off the accelerator this year," she told the newspaper.

Rising interest rates may encourage Aussies to compare home loans as the cost of borrowing rises. Last week Westpac said that funding problems had forced it to shut down part of its RAMS home loans business, reducing the availability of its mortgages.

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