The nation’s peak body for finance and mortgage brokers says ongoing speculation on the Reserve Bank’s likelihood of increasing official interest rates is causing instability in the market.

The Finance Brokers Association of Australia (FBAA) says if rates are going to trend upwards, it would be better if it happened sooner rather than later because it would help to stabilise the economy.

“Delaying a decision doesn’t do anyone any good,” said FBAA executive director Peter White.

“If that’s the way it’s going to go, as has been suggested, it should probably start earlier so borrowers can prepare themselves when considering what loans are best suited to them.

“Fixed rates need to be factored in to the equation to ensure that increases do not negatively impact family budgets and future family needs.

“At the moment, the greed factor seems to reign with banks and if they hadn’t engaged in margin creep with interest rates over the past couple of years, we wouldn’t be in this potential position.”

Mr White said Australia would have a better-balanced economy if interest rates sat around the 6.0 per cent to 6.5 per cent mark.

“As it is, a vast amount of lending is based at a level two per cent above the prevailing borrowing rate for serviceability of a loan and that will help to ease any future rate increases from causing hardship.”

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