Home loans customers warned about interest rates increase

Prospective home loans customers may want to consider applying for a fixed rate mortgage in light of recent warnings that interest rates are set to increase.

According to the latest BIS Shrapnel Residential Property Prospects 2011-14 report, the variable rate is likely to peak at 9.4 per cent by the end of 2013.

It is thought the increase will arise as a result of the impending interest rates hikes by the Reserve Bank of Australia (RBA), which is expected to make the changes to the cash rate soon to combat inflation.

Angie Zigomanis, author of the report, commented: "Our forecast is for a half a per cent rise later this year, and another half a per cent rise in the first-half of next year."

At the last meeting of the RBA board, it was decided that the cash rate should remain at 4.75 per cent until more information was gathered about financial and economic developments overseas.

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