The main motivation behind the rise is an attempt to slow down inflation in Australia, which has crept to 3%pa largely a result of fuel prices remaining high and strong domestic and international economies.
For investors this is disappointing news as markets will no doubt slow down as people come to terms with the rise, and it will delay future growth.
The Government is sure to come under some heavy criticism over this rise as it had made election promises to keep rates down.
Ironically, the same reasons that cause the problem of the rate rise, are good news for property investors as a bouyant economy and moderate inflation are all contributing to the rising property proces being experienced across Australian markets.
It once again brings into focus the importance of quality asset selection and minimising holding costs.
Premium property is in the main insulated from movements in interest rates as many are cash buyers or can afford the additional holding costs.
There is also a great variation in Loan products and you need to ensure that you have the most effective and affordable loan on your property.
In our Special Reports Section, you will find an important report entitled Interest Rate Rise Issues which goes through the startegies to maximise protection from interest rate rises.
Hopefully we have seen the last of the rises, and perhaps can look forward to some reductions once inflation is brought under the 3%pa level.
View the Official Reserve Bank Media Release