Wagga financial experts have predicted that rising interest rates will deliver a long-awaited boost for cash savers but will encourage many people to cut back on spending around the region.
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The Reserve Bank of Australia on Tuesday raised interest rates by 25 basis points to 0.35 per cent, representing the first increase to the official cash rate in 11 years.
Gavin Lamb, director of financial planning at the Navigate Accounting, Planning and Finance firm, said the rates decision was generally an advantage for cash savers and more conservative investments.
"It will see a higher return on their cash savings and you will also see investors with more conservative parts of their portfolios that are cash or fixed-interests based get a better return over time," he said.
Mr Lamb said the economy could see more rates rises but it was far from certain.
"The interest rate markets seem to have priced in more than one rate rise ... they are probably going to come thick and fast over the next year or two," he said.
"Basically, the rates have been dropping for a long time and there hasn't been much good news on the horizon for the average saver until [Tuesday]."
RSM Director Andrew Bowcher, who advises individuals and businesses on bankruptcy, debt and financial pressure, said rising rates had an impact on people with a mortgage or any other form of debt.
"A lot of people may have just gone into the market as first homebuyers and scraped their funds together, not factoring in one or two interest rate rises," he said.
"We don't know what the interest rates are going to be if they do go up, but as you'd appreciate if you have a sizeable mortgage, any interest rate increases will need to be paid from somewhere.
"That may impact people's general savings or their household expenditure, because ultimately if their incomes don't go up, they only have so much money to allocate, and that has to go to paying their mortgage or servicing their debt."
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