Will interest rates reach historic lows?

Tuesday 15 January 2013

Article by Mozo

Troubled growth for Australia's non-mining economy is rising speculation that interest rates could go as low as 2.25% in 2013, making for historically low home loans in Australia.

divided speculation on home loan interest rates.

A weakening economy and rising unemployment are some of the predictions being made for Australia over the next year. But one major factor that economists are split over is if the Reserve Bank will further reduce interest rates this year.

National Australia Bank are preparing for interest rates to be hacked down to 2.25 percent by September. The NAB's hunch is that the RBA will introduce another rate cut as soon as March and a further 25 basis points reduction throughout the year.

On the other side of the fence, CommSec chief economist Craig James stated "Overall 2013 should be a better year for retailers provided that attention is kept to keeping prices down," and expressed opinion that the interest rate setting is currently just right.  Mr James expects that the RBA will not be making any changes over the next few months.

Throughout the last 14 months the central bank has reduced interest rates to a low 3 percent, in an attempt to stimulate household spending and boost the economy. However, not all banks have passed on the full rate cuts. Australians are encouraged to give their home loan a health check, to insure they are taking full advantage of the savings available on the current low home loan interest rates at hand.

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