SYDNEY: Australian mortgage rates are still 50 basis points below the average of the last 15 years, a top central banker said on Thursday (March 25), after warning speculators against betting on fast rising house prices.
Record high house prices were one of the reasons that led the Reserve Bank of Australia (RBA) to raise interest rates ahead of other central banks in the developed world, and it has signalled repeatedly that rates should rise further in coming months.
"The important thing is the level of interest rates that borrowers face, not the cash rate," RBA Assistant Governor Philip Lowe told a briefing.
"At the moment, the mortgage rate is still around 50 basis points below the average of the last decade and a half."
Lowe's comments came after a speech in which he said that it would be unhelpful if a speculative cycle emerged in the housing market.
The average standard variable mortgage rate offered by Australia's four largest banks, which control over 80% of the mortgage market, stands between 6.74% and 7.01% now, well above the RBA's target cash rate of 4%.
Australian banks had said they needed to lift mortgage rates faster than the RBA's cash rate to offset higher funding costs in the wake of the global financial crisis.
Interbank futures show investors expect the RBA to raise rates to around 4.3% by June. Over the next 12 months, another 126 basis points of rate rises are seen. -- Reuters
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