The RBA will have an interesting balancing act this year as it continues its vigilant watch on inflation whilst allowing the economy to grow from a weak 2009. Many areas of the economy such as proerty and construction are still adjusting to the new financial landscape featuring scarcer, more expensive funding are especially susceptible to increased rates.
With the cash rate likely to be close to 5.00% pa by the end of 2010, commercial borrowers should consider what impact these likely changes will have on their financing and ability to service interest. The RBA's decision to drop rates from 7.25% in October 2008 to 3% in April 2009 provided strong relief to those with high levels of debt or assets with falling income levels. However, the combination of expected RBA increases and the rises in margins charged by lenders will see interest costs continue to increase for those on variable facilities or having to rollover/refinance existing funding.
The positive news for commercial property is that rising interest rates will generally reflect an improving economic outlook this year and a better operating environment.
If you require commerical loans or development finance, speak to the commercial finance team at Intellichoice today on +61 7 3624 1900 or visit the website on www.intellichoice.com.au.
