Interest rates could be set to rise again in April after Australians return from their Easter break.
Home borrowers are still dealing with March’s rate increase, on top of three hikes at the end of 2009.
With the economy gathering strength, some experts expect the Reserve Bank of Australia (RBA) to put up rates when it next meets, on April 6.
National Australia Bank chief economist Alan Oster says the Australian economy is expanding more rapidly than expected.
‘Over 2010, we now expect soaring bulk commodity prices to bolster economic growth and push unemployment down to four per cent or lower,’ he said in a note to clients.
‘Against this backdrop there is little doubt that the Reserve Bank will wish to rapidly unwind its current expansionary policy settings.’
RBA assistant governor Guy Debelle’s speech to the Australian Mortgage Innovation Forum, on Tuesday, will be closely watched for clues on the next possible rate move.
Official data on retail sales and building approvals for February, both due out on Wednesday, are not expected to have a major bearing on the RBA’s thinking for April.
Unlike NAB, the Commonwealth Bank expects policy makers to leave rates on hold in April.
But the bank is predicting a rate increase in May, after the central bank has digested consumer price index data for the March quarter.
‘The Reserve Bank has set the scene for a gradual policy tightening,’ it said.
‘There are nine monetary policy meetings to come this year, and we expect the RBA to raise rates at four of them.’
Under this scenario, the cash rate – now at four per cent – could rise to five per cent.
That means monthly repayments on an average $300,000 home loan would jump by $205, to $2173, by Christmas.
With many borrowers anxious about another rate increase, Treasurer Wayne Swan assures voters taxpayer funds have been invested wisely to promote competition in the home-lending sector.
He cited a previously unpublished analysis, by the Australian Office of Financial Management, showing that government buying of residential mortgaged-backed securities had help smaller, non-bank lenders.
‘The new analysis shows the government’s support is giving private investors the confidence to invest increasing amounts of their own money in this important market, which many smaller lenders rely on heavily to make home loans,’ Mr Swan said in an economic note on Sunday.
On the international front, balance of trade data for February is due out on Thursday.