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Homeowners face finding another $50 a month to pay the mortgage, with the Reserve Bank tipped to lift official interest rates again today as it battles to dampen house prices and keep inflation pressures at bay.

A quarter percentage point rise this afternoon would mean official rates would have climbed 1.25 percentage points since October, adding more than $240 to the monthly repayments on a $300,000 mortgage.

It would be the biggest run of increases in a 12-month period since the Reserve took the official cash rate from 5 per cent to 6.25 per cent between November 1999 and August 2000.

But the decision could be a close call, with signs of softness in the retail and building sectors lifting expectations the Reserve may wait at least another month before moving in the week before Treasurer Wayne Swan hands down the Federal Budget.

At least mortgage holders may be saved from a “super-sized” lift to their repayments, with the NAB yesterday saying it would not increase its rates more than any move in the official cash rate. Its recent policy of matching rate rises had led to more customers.

That prompted Mr Swan to challenge other major banks to follow NAB’s lead.

TD Securities senior strategist Annette Beacher expects the Reserve board to hold rates today.

But Macquarie Bank rate strategist Rory Robertson said the chance of a rate rise was about 80 per cent.

“Interest rates here remain unusually low, our jobs market is strengthening, China and bulk-commodity prices are booming, so, too, local home prices, and the world’s biggest economy increasingly is getting back on its feet,” he said.

A new survey from Dun and Bradstreet of business executives out today shows sales, growth, employment and capital investment expectations all rising. 

Source  :  www.thewest.com.au

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  • Banks say they will be forced to lift rates
  • Will be more than official RBA rises
  • Facing higher costs of raising money
  •  

     

    BANKS have confirmed homeowners’ worst fears: they will increase mortgage rates by more than the official Reserve Bank rises in the coming months.

    The Big Four banks claim they will be forced to lift interest rates beyond the official RBA cash rate increases because they are facing higher costs of raising money in the wholesale markets.

    Full story  :  http://www.news.com.au/business/money/story/0,28323,26194165-5013952,00.html

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    Sarah MacPherson, Melville

    Sarah has a 19-year-old daughter living at home, and is in the process of starting up a technology-based business.                 single mother
     
    What Sarah wanted:
    Measures to help vulnerable in society, such as pensioners, carers and single parents;
    . Increased taxes on cigarettes and alcopops;
    . Stimulus packages for small startup companies;
    . Maintenance of the First Homeowners Grant boost;
    . Investment in education;
    . Dumping of the GST charged on sanitary products.
     What she got:
    . Increased pensions – by $32.49 for singles and $10.14 per couple.
    . The pension age lifted to 67 between years 2017 and 2023.
    . First Homeowners Grant boost to remain until September 2009, but to be halved after that.
    . Opening up university places for additional 50,000 students over four years from next financial year.
    . $437 million over four years to boost number of disadvantaged students at university.
    . A 50 per cent small business tax break for eligible capital expenditure.
    Her verdict:
    “I suppose the first word that came to mind was ‘predictable’,” Sarah said.
     
    “The rise in pension age means many of the battlers will have to battle a little longer.
     
    “But if you look at the current global economy, they probably haven’t done too badly – they can’t please everybody”

    www.watoday.com.au

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