Builders seek new ground

"Our region is starting to feel the impacts," Vonette Mead, the operations manager of Spreyton-based commercial and residential construction firm Mead Con, said on Monday, a day before the Reserve Bank was set to consider another interest rate hike.

"There definitely is a reduction in inquiries."

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Potential first home buyers were being particularly squeezed by higher rates and construction costs, with their borrowing capacity decreasing.

She said she knew of residential contractors looking to "see what they will be doing other than residential".

The Reserve Bank is widely expected to hike again on Tuesday following on from the Australian Bureau of Statistics' annual inflation estimate to December of 7.8 per cent, the highest in more than 20 years.

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MyState Limited managing director and chief executive Brett Morgan on Monday said MyState Bank expected some more short-term pain on interest rates, but also expected some longer-term relief.

He tipped the Reserve to hike by 0.25 percentage points on Tuesday, with one or two further increases to follow.

" ... we also expect there might be one or two more, but, towards the end of the year, we can also see them coming back ...," he said.

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"The Reserve Bank is really trying to fight inflation ... but we've also seen around the globe inflation rates start to fall ..."

He said the bank expected that to happen in Australia too, which was why it expected rate cuts towards the end of the year or early next year.

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