Home loan repayments 'are set to grow'

Monthly repayments on an average home loan will rise by between $250 and $500 by the end of the year, an expert has predicted.

Terry McCrann, a financial commentator for the Herald Sun, said that the Reserve Bank’s decision to fix interest rates this month had been a "very close decision".

Referring to the recently released minutes from the bank’s meeting, he noted that most of the participants had predicted making further adjustments to the Reserve Bank’s policy this year.

"For ‘adjustments’ read ‘rate increases’, and note the plural – more than one," warned Mr McCrann.

He forecast that the next rate hike will come in two weeks as the Reserve Bank seeks to prevent the economy from overheating.
Mr McCrann said that consistent rate rises could mean that for home loans of $500,000, monthly repayments will go up by between $400 and $800.

Rising rates may encourage bank customers to compare home loans in search of the best deals. A report by the Herald Sun earlier this month claimed that a range of smaller lenders are set to take on the major banks in the home loan market this year.

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