Australian rates rise as homeowners struggle

Australian central bank increases their benchmark lending rate again. Union says that Australian homeowners are struggling and a rate increase will further hurt them.

On Tuesday, the Australian central bank raised the benchmark interest rate. This is the second raise in the last four weeks. It brings the rate up to 7.25% with its quarter point raise. This also marks the highest rate the country has seen in the last 12 years.

There is some evidence that the country's spending in both company and consumer sectors is levelling off. The nation's currency dropped, as the price of bonds there rose. Investors believe that the bank will raise rates again in the next 12 months. Still, the country has seen an increase in this interest rate by a full point since August.

In comparison, the United States, Canada and the UK banks have cut interest rates substantially, in the hopes of protecting their citizens from a slow down in the global economy.

Some Australian groups warned that this would cause additional turmoil for homeowners, already struggling to keep up with the rate increase with their loans. According to the Australian Council of Trade Unions, or ACTU, the rise in rates continues to hurt homeowners as it drives affordability of homes down.

According to Sharan Burrow who is ACTU's President, as reported by the Herald Sun, "Right now today our empathy is with those working Australians who will look at another rate rise, if that occurs, and think how on earth do I manage this." This was reported prior to the rise. Additionally, "we say to the banks, if that occurs it is now again in your hands to look at how you manage what has been a devastating set of rises…and we want them to be absolutely committed to doing everything they can to help people stay in their houses."