Rate rise almost a certainty – economists

A surge in job advertisements in April and a further increase in house prices have made a rise in interest rates more likely when the Reserve Bank meets tomorrow. Economists are almost unanimous in predicting that the rate will rise by 0.25 percentage points, the first rise in almost two years. This would add $16 a month to the cost of servicing every $100,000 borrowed by home buyers and businesses, but would still leave rates just above their lowest levels.

The ANZ Bank jobs index reported yesterday that advertisements in capital city newspapers surged a record 24 per cent in April, more than making up for the falls in February and March. There are now 10 per cent more jobs on offer than there were six months ago, with the Australian Bureau of Statistics estimating that 125,000 jobs have been added in the six months to March. The unemployment rate is down to 6.3 per cent. The job ads increase is more pronounced in the smaller capitals, however, with Sydney and Melbourne lagging behind Brisbane, Adelaide and Perth.

Also released yesterday were figures from the Commonwealth Bank and Housing Industry Association, showing that the median price paid by first-home buyers has soared 22 per cent in the year since the Government doubled its grant to $14,000 before dropping it back to $10,000 from January 1st 2002. The typical first-home buyer paid $222,700 in the March quarter, up almost $30,000 from the March 2001 quarter.