How far will home loan interest rates go?

Australia’s economic growth is set to accelerate, resulting in the re-emergence of serious inflationary pressures and high interest rates, BIS Shrapnel has warned.

According to the researcher’s Long Term Forecasts report for 2010-2025 released today, tightening labour markets and accelerated household spending will lead to higher consumer price inflation, forcing the official cash rate up towards 6.5 per cent and home loan rates in excess of 9 per cent within three to four years.

I myself am not so sure this will happen,  sure rates will rise over the next few years. However we would need the economy to be growing at a very rapid rate to reach anywhere near these figures.

I acknowledge their is a serious housing shortage and ongoing infrastructure deficiencies which could place pressure on inflation.

We need the lenders to ease funding restraints for developers and this in turn will sustain a recovery in activity over the next couple of years.

This is good news for home owners and investors alike when rates go up your property value normally does too.

If your thinking of buying a property now maybe a good time?



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