Will interest rates hit 9.5%pa?

Mortgage lending rates are expected to hit 9.5 per cent within three years, according to BIS Shrapnel.

Speaking at a media luncheon yesterday, BIS Shrapnel chief economist and director – economics and property Frank Gelber said mortgage lending rates would hit 9.5 per cent by the end of 2013.

Is it all hype? Or does it hold some weight? I think 9.5 could be a stretch, however I do think that high 8 ‘s is a definite possibility.

A couple of years ago it was said rates would hit 10 per cent and nobody ever thought they would get that high again. While they never got to 10 per cent, they did surpass 9 per cent pretty quickly.

I think the RBA were right to signal further rate increases and I expect the official cash rate to hit 5.5 per cent before December 2011, which would take the standard mortgage rate to approximately 8.5 per cent.

It all hinges on how well Australia recovers post GFC. If you are cautious about interest rate rises on your home loan maybe fixing part of it now might be a good idea given their are a few fixed rate specials in the home loan market at present.


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