Homeowners and home buyers can rejoice with no interest rate rises on the horizon

Low inflation rate should keep mortgage interest rates on hold and is good news for for homeowners and first time home buyers
Australia's inflation rate rose just 0.1 per cent in the March 2007 quarter, or 2.4 per cent over the year, well below expectations, and taking pressure off home loan interest rates.
The number is good for Australian households as it eases pressure on the Reserve Bank to raise interest rates this year. The RBA sets interest rates to keep inflation below 3 per cent.
The Australian dollar tumbled on the surprisingly low number, as bets eased on a rate rise. At noon, the dollar was quoted at $US0.8256, down from $US0.8322 early today.
Economists had expected the consumer price index (CPI) to rise 0.6 per cent over the March quarter or 2.9 per cent over the year.
The low number means borrowers can breathe a sigh of relief as the central bank sits back and lets last year's three interest rate rises hold back spending and inflation.
Treasurer Peter Costello predicted inflation would be below 2 per cent next quarter.
"This shows that inflation in Australia is moderate and families will welcome the fact that prices hardly rose at all in the March quarter."
Banana effectThe most significant price falls keeping inflation down in the quarter were fruit (down 33.8 per cent), with banana prices returning to the levels of March quarter 2006.
Falls in overseas travel and accommodation costs (down 2.2 per cent) and audio, visual and computing equipment (down 2.4 per cent) also helped keep the inflation rate down.
The most significant price rises in the March quarter were for pharmaceuticals (up 12.8 per cent), house purchase (up 1.0 per cent), secondary education fees (up 7.1 per cent) and rents (up 1.4 per cent).
Over the year to March quarter 2007, health costs rose 4.4 per cent, well above the inflation rate, mainly due to an increase in net hospital and medical services ( up 5.9 per cent).
Foods costs trend up, despite quarterly dip While food prices were down 2.3 per cent over the quarter, food prices were well up over the year.
Over the twelve months to the March 2007 quarter, food prices jumped 4.6 per cent, mainly due to increases in fruit costs (up 14.9 per cent) and take away and fast foods (up 4.0 per cent).
Perth, Darwin lead the packThrough the year to March quarter 2007, inflation rose in all capital cities with the increases ranging from just 1.8 per cent in Adelaide to 4.0 per cent in Darwin and 3.5 per cent in Perth.
The higher result for Darwin was largely due to an 8.5 per cent rise in housing costs, more than double the 3.5 per cent increase for the nation.
Perth also recorded a strong rise for housing costs (up 6.9 per cent) that was almost double the national average.
Through the year to March quarter 2007, rents jumped (up 4.4 per cent), house purchase (up 2.9 per cent) and property rates and charges (up 5.6 per cent).
Source: NEWS.com.au