Home buyers are trying to find new ways to escape from the rise of ever increasing interest rates. However the question remains- how high can they go? Interest rates should continue to gradually increase according to some economists. They are also of the view that there may be some rises by various banks out of the RBA official rise up until the next board meeting of the Reserve Bank of Australia (RBA). While some others feel that there may be a decrease in the rates by the end of this year depending on the consumers spending. The present interest rate remains at 7.25 per cent. Few other economists are of the view that the interest rates will remain the same till the end of this year. Because of this home buyers are cautious to escape from the raising interest rates.

One of the economists of the National Australia Bank has said that the increasing rates will curtail the domestic demand through the other parts of the economy. Evidence shows that domestic demand is slowing down day-by-day.

The ANZ, one of Australia’s biggest banks, has predicted that the rate may increase up to 7.75 per cent this year. The ANZ has totally upset the financial market due to its change of interest rates outside of the RBA official rise. Inflation has been hard to control of the RBA since 2007. In is forecasted in this financial year, the inflation rate will rise due to the high wage demands of the labor market and due to the tax cuts in budget. Most affected are the house buyers and public not only because of the interest rate but also because of the high rate of inflation.

The RBA has been increasing interest rates in an effort to try to bring inflation down. The increase in cash rate has also affected the high inflation rate and many economists are worried about it. The RBA is also of the view that the borrowing of costs has been far above the ground by the major banks, which has led to the increase and flexible interest rates. However, the slow down of the demand in economy may help the RBA to keep the rates on hold. But it is not sure whether the inflation rate would be under control.

Meanwhile, industry has taken steps to improve the trade by reducing the metal price and some of the foremost Economies of Asia have raised their own interest rates to battle the inflation. However the growth is Asia is not sustainable. The inflation premium is mainly because of the oil prices.

Hence due to the increased rate of interest and high inflation, home buyers will have to continue to pay a high rate of interest.