Raising interest rates could stifle home building according to the Housing Industry Association (HIA).
The institute's chief economist, Harley Dale, is urging the Rerserve Bank Board not to raise interest rates at its meeting today for fear of further slowing home building. Dale argued that higher interest rates, together with obstinately large supply side constraints, were weighing down the new home building industry - with the number of building approvals falling in May 2010.
"The hikes in interest rates that we have already experienced are clearly biting, exacerbating on-going difficulties with land supply, credit availability, and a range of other obstacles preventing a sustainable boost to Australia’s new housing supply," he said.
"Steady interest rates are the clear signal."
Meanwhile, the Bank of Queensland's chief operating officer, Ram Kangatharan, warned that banks may have to increase interest rates regardless of any RBA move, due to deteriorating funding conditions.
"On the wholesale side, things are getting tougher," Kangatharan told Dow Jones Newswires.
"Sustainable retail deposit growth is pretty tough in this environment," he added. "All of the banks are starting to feel the pinch in terms of deposit margins. As the pressure continues on the majors, they would want to move outside the RBA rates - I think what's holding them back is election year."
The institute's chief economist, Harley Dale, is urging the Rerserve Bank Board not to raise interest rates at its meeting today for fear of further slowing home building. Dale argued that higher interest rates, together with obstinately large supply side constraints, were weighing down the new home building industry - with the number of building approvals falling in May 2010.
"The hikes in interest rates that we have already experienced are clearly biting, exacerbating on-going difficulties with land supply, credit availability, and a range of other obstacles preventing a sustainable boost to Australia’s new housing supply," he said.
"Steady interest rates are the clear signal."
Meanwhile, the Bank of Queensland's chief operating officer, Ram Kangatharan, warned that banks may have to increase interest rates regardless of any RBA move, due to deteriorating funding conditions.
"On the wholesale side, things are getting tougher," Kangatharan told Dow Jones Newswires.
"Sustainable retail deposit growth is pretty tough in this environment," he added. "All of the banks are starting to feel the pinch in terms of deposit margins. As the pressure continues on the majors, they would want to move outside the RBA rates - I think what's holding them back is election year."
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