A rise in interest rates has been forecasted

An interest rate rise has been on the books for a few months now and once again talk about a rise of interest rates is hot in the media.

According to Glenn Stevens from the RBA this is good news because it means our economy is recovering.

Interest rate rise is not a question of if, but when:

Only a year ago there was talk of doomsday downturn in the economy not seen since the Great Depression. But thanks to the stimulus we only experienced a mild downturn if we are to believe Mr Stevens.

Australia has gotten away with less damage than most other countries and what we had to endure during this GFC was even less than back in the 1970s, 1980s and 1990s.

The Reserve Bank’s rapid and steep reduction in interest rates is seen as one of tools that helped to save our nation from much worse. It helped to mitigate the increasing costs banks were facing to raise funds. Many banks passed these savings on to their customers in the process.

Those reductions also helped businesses to borrow at attractive rates to enable them to stay cash flow positive.

Despite the good for us as home owners, there will come a time when the fun comes to an end as the current interest rates are too low to be sustainable for the long term.

Mr Stevens also mentioned the widely held view that Australia has performed better than most – if not all – other countries in surviving the global financial crisis relatively unscathed.

In the end non of us can point the finger at what exactly helped to save us from certain doom.

Now we are left with another lesson from which we hopefully have learned enough. It is sad to see that despite our relative unscathed economy (compared to the bigger picture) many Australian businesses have had to let go of staff.

A predicted sea-change boom is expected to happen in coastal towns all over and many regions need to gear up and reconsider their current infrastructure if they want to stay in the run for most popular place to live. In the meantime we keep watch for the interest rate rise and prepare our finances to keep up with the higher rates.

Source: News.com.au

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