Oz hammered by rate hikes

Interest rates in Australia have risen for the 12th consecutive month…

The Reserve Bank of Australia has increased the official interest rate by a further 0.25% to 7.25%.

The Reserve Bank of Australia (RBA) increased the cash rate (Australia's official interest rate) by 0.25 percent to 7.25 percent at its March meeting, which is very unwelcome news for borrowers who have now seen two cash rate rises already this year.

This is the 12th consecutive rate rise in Australia and the third increase for 2008. Many borrowers are becoming increasingly worried and uncertain about where this ongoing trend is going to end.

Local Mortgage Choice loan consultant, Anthony Smith, commented: "An increase of 0.25 percent will make a difference to repayments on the average property loan, though only modest. On a loan of $250,000 over 30 years at the average standard variable rate of 8.98 percent, a move to a 9.23 percent interest rate - $2,053.13 per month from $2,007.88 per month - will mean an additional $45.25 per month, or $10.40 per week," he said.

"Whilst yet another increase, in isolation that is the amount many people spend on a week's worth of morning coffees or one to two mid-week lunches. It can be disappointing for borrowers to give up such treats but it is in the best interests of their budget, at least until their mortgage rate eventually decreases".