The Reserve Bank has lifted interest rates by 25 basis points, pushing the cash rate to 3.25 percent.
The 25 basis-point rise will add approximately $40 to the average monthly payment for a typical $300,000 mortgage, if passed on by commercial banks.
Commenting on the rise, RBA governor Glenn Stevens said in a statement: “Economic conditions in Australia have been stronger than expected and measures of confidence have recovered. The basis for such a low interest rate setting has now passed,” he said.
He added that the global economy is resuming growth.
“With economic policy settings likely to remain expansionary for some time, the recovery will likely continue during 2010 and forecasts are being revised higher.'”
Mortgage Choice senior corporate affairs manager, Kristy Sheppard said borrowers must prepare themselves for further rate hikes.
“Borrowers should prepare themselves for a festive season featuring higher mortgage repayments and know where to look for signs of upcoming interest rate movements,” she said.
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