With the world focused on the Paris Olympics, the Reserve Bank (RBA) is being advised to avoid hasty decisions regarding interest rate hikes.
Bell Partners Finance managing director Mark Stevenson (pictured above) stressed the potential repercussions of increasing the current OCR of 4.35%.
“The rate increases have had a big impact and continue to do so. Another increase will hurt badly,” Stevenson said, highlighting the struggles faced by mortgage holders amid 13 rate hikes in the past two years.
The recent increase in the inflation rate to 3.8% from 3.6% in March has sparked discussions on whether the RBA should respond with another rate hike. However, Stevenson warned against a reactive approach, noting the current economic pressures.
“It would definitely be a false start from the RBA if they responded to this latest rise in inflation by hitting borrowers with another interest rate hike,” Stevenson said.
Stevenson pointed out the significant impact of previous rate increases on mortgage holders, many of whom have resorted to switching to interest-only payments.
“There have been reports that around half a million mortgage holders have already switched to interest-only payments because they have been struggling to make ends meet,” he said.
Stevenson urged the RBA to monitor economic developments, particularly government stimulus efforts, before making further rate adjustments.
“We would hope the RBA would continue to monitor the economic developments, particularly the impact of government stimulus from tax cuts and cost-of-living handouts,” he said.
“RBA wants to reduce inflation back to its target range of 2% to 3%, and we seem to be heading that way even with inflation rising from 3.6 per cent to 3.8%.”
Bell Partners Finance has been actively supporting customers struggling with mortgage repayments due to higher interest rates and cost-of-living pressures.
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With multiple locations across Australia, including Sydney, Melbourne, Brisbane, and Perth, they are well-positioned to assist those in need.
Stevenson concluded by emphasising the importance of a measured approach.
“It would be unwise for the RBA to jump the starter’s gun in its race against inflation, especially when many Australians are already under financial strain,” he said.
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