Home News Mortgage interest rates to hit 9.5%

Mortgage interest rates to hit 9.5%

Font size :
Nila Sweeney
Mortgage holders, take note: there’s a good chance you’ll be paying up to 2% more for your home loan by Christmas 2013.
At least, that’s what industry forecasters BIS Shrapnel are predicting.
BIS Shrapnel is expecting a recovery in residential property markets that will drive interest rates up by 2% in the next two years, boosting the standard variable rate on a home loan up to 9.5%.
BIS Shrapnel senior manager Angie Zigomanis points to a potent mix of a strengthening economy, record low unemployment and increasing net migration as the key drivers of Australia’s forthcoming real estate recovery.
“Economic growth is forecast to regain traction through 2011, and continue to accelerate in 2012 and 2013 as resources investment flows through to the rest of the economy,” Zigomanis says.
“Strengthening employment growth – the unemployment rate is forecast to fall below four per cent in 2013 – will also see net overseas migration inflows turn around, and the underlying demand for new dwellings begin to rise.”
With the level of new housing construction on the decline across the nation, Zigomanis says the corresponding fall in building completions will lead to an even lower supply of housing.
“This will underpin the strength of residential conditions, causing rental markets to tighten and rental growth to pick up, particularly in those markets where it has been weakest in the last couple of years,” he adds.
So what does this mean for the everyday mortgage holder – or those who are considering getting a home loan in the near future?
According to BIS Shrapnel, there will be one or two interest rate rises in the next twelve months, which will allow confidence to start returning to the property market as economic growth strengthens.
As momentum builds and the economy approaches boom conditions, improved confidence will come from strong employment and income growth, which will maintain property buyer demand.
These “booming economic conditions” are then forecast to eventually cause inflationary pressures, which will encourage the Reserve Bank of Australia to adopt a more aggressive stance on interest rates.
“Housing rates are consequently forecast to peak at 9.5% by the end of 2013,” Zigomanis says. “(Interest) rates at his level will eventually bring about a downturn in both the residential market and the economy over 2014.”
The moral of the story? If you’re concerned that increasing interest rates will put pressure on your household finances, perhaps this is the right time to lock your loan into a fixed rate – or a the minimum, you could consider splitting your mortgage so that at least half of the loan is fixed. It will give you valuable peace of mind against rising rates, now and in the future.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

House prices return to more affordable levels in mining towns House prices return to more affordable levels in mining towns

While the end of the mining boom has had a negative impact on property prices, homes in the region have become more affordable Read more

Borrowers should anticipate a possible rate hike Borrowers should anticipate a possible rate hike Some experts advise borrowers to look for a fixed loan that allows extra repayments so that they can whittle down the balance sooner ... Read more

Why choosing the right mortgage is hard for first-home buyers Why choosing the right mortgage is hard for first-home buyers Many feel overwhelmed by the sheer range of products and interest rates on offer, a new survey reveals ... Read more

Mortgage applications drop in second quarter Mortgage applications drop in second quarter This marks the “beginning” of a downward trend, says Equifax executive ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Jul 27, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
  • How much do you want to borrow?
  • How much deposit do you have?
  • How much is your house worth?
  • How much do you still owe on your mortgage?
  • What type of mortgage do you have?

  • How much is your new home?
  • How much do you want to borrow?
  • How soon do you want a mortgage?
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords