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Scott Morrison has warned interest rates could rise higher than necessary if the economic recovery is not managed properly.
With a federal election looming within months, the prime minister says Australia's recovery from the pandemic has to be secured by people who have a track record in economic management.
"Otherwise you will see petrol prices go up, you will see electricity prices go up, you will see interest rates go up, more than they would need to otherwise," Mr Morrison told reporters on Monday.
"That's why economic management is so important now as we come out of COVID - having secured our health through the pandemic, we now must secure the economic recovery."
However, petrol prices are only now beginning to ease from record levels in Australia as global oil prices come off the boil.
Commonwealth Securities chief economist Craig James said a higher US dollar had been weighing on global oil prices, as had speculation that US President Joe Biden would soon unveil measures to stem rising petrol prices.
"In Australia, the good news for consumers and retailers is that declines in crude prices are passing through to wholesale and retail prices," Mr James said.
The Australian Institute of Petroleum said the national average unleaded pump price fell by 2.2 cents last week to 164.5 cents a litre, having struck a record high of 169.5 cents a litre last October.
A new survey shows two-thirds of Australians believe a full one percentage point rise in interest rates would put pressure on their financial position.
The report commissioned by the Finance Brokers Association of Australia found about half of those surveyed said they would need to look at refinancing their home if their mortgage repayments went up $300 a month.
When asked whether they would be able to meet such an increase, the survey of just more than 1000 respondents found 57 per cent answered "not at all".
"Many Australians are clearly on the brink and are sleepwalking into disaster, living in the false hope that rates will stay this low," the association's managing director Peter White said.
"One per cent is not a large increase. My message to Australians is that we must be better prepared."
He said borrowers had taken full advantage of historically low rates combined with schemes that allowed for low deposits.
But Mr White issued a chilling warning, saying the housing market had soared and there was a reasonable chance it would undergo a correction.
This means those with low deposits who have stretched their finances to make large repayments could see themselves with negative equity, owing more than the value of the property.
"Add a mortgage increase they can't pay, and there could be a lot of people in real trouble," he said.
However, Reserve Bank assistant governor for economics Luci Ellis expects a majority of borrowers won't feel the impact when interest rates first start rising
That's because a majority of people have actually paid off more of their mortgage than needed through offset and redraw loan accounts, particularly during the pandemic when people have not been able to spend.
"If and when rates do eventually rise, a lot of them will not have to raise their actual repayment because they have already paid more than then need to," Dr Ellis told a parliamentary hearing.