Look again - interest rates are rising

Real mortgage rates have actually increased over the past two years – here’s what you need to know.

Summary: While the RBA dropped its cash rate to a "record low" level of 1.75 per cent in April, it’s important to note that in real terms, mortgage rates have increased in real terms over the past two years and now sit just below the long-term average. Meanwhile, spreads on new mortgages have become wider in the face of banking regulation.

Key take-out: Nominal interest rates may fall further, but it’s unlikely that real interest rates for both households and businesses will reach the lows of 2014.

Key beneficiaries: General investors. Category: Economy.


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