The Government has proposed to increase the benchmark interest rate that applies to capital protected borrowings to the Reserve Bank of Australia (RBA) indicator rate for standard variable housing loans plus 100 basis points. Prior to this announcement the benchmark interest rate was set at the RBA indicator rate for standard variable housing loans.
The Government has confirmed that this measure will apply to capital
protected borrowings entered into from 7:30 pm (AEST) 13 May 2008.
Comment:
Increasing the benchmark interest rate by 100 basis points will allow
existing borrowers to claim a larger proportion of the expenses on the
borrowings as a deduction. This announcement could also make these
products more attractive to some investors.