Interest rates rise unexpectedly

The Reserve Bank of Australia (RBA) announced this afternoon at 2.30pm that interest rates would rise 0.25% from 3.6% to 3.85%.  This was an absolute shock to the stock markets, with the ASX suffering a tumble this afternoon. It will also be a shock to home buyers and the real estate market in general who all expected the pause in interest rates last month to continue.

Was this rate rise justified?

It was a very mixed forecast by economists and financial markets, the latter absolutely betting on rates being paused while economists were divided. Buyers in the area felt rates were at their peak and now was the time to buy. Sydney buyers were more abundant than a few months ago and competition was more prevalent.

So, will this surprising rate hike dampen demand in our area?

Obviously, things may be a little less positive initially, but with most media outlets calling this the peak of interest rates and combined with our limit supply it should not have too much impact on the local market.

About the author

Ian Pepper has had a long and distinguished career as a finance and real estate professional. Originally trained as a Chartered Accountant in 1995, Ian worked in Sydney and London. He has an MBA from Macquarie Graduate School of Management and now sells real estate with Ray White Helensburgh. Ian also volunteers with local community groups including school P&Cs, sporting clubs and business chambers.

Ian advertises in the Illawarra Flame, follow him on Facebook and Instagram