Home loan rates to hit 9% by 2013, says expert

Mozo

Wednesday 15 September 2010

Mortgage rates will soar to nine per cent and above over the next three years, a leading property expert has predicted.

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Frank Gelber, chief economist at research firm BIS Shrapnel, argued that Australia's strong recovery from the economic downturn would force interest rates to rise.

Speaking at a conference in Melbourne, he said: "When inflationary pressure comes through and the Reserve Bank gets aggressive we are going to see housing rates above nine per cent.

"And that means a cash rate of seven to 7.5 per cent."

If implemented, such progressive hikes could prompt more property owners to compare home loans and refinance. As the Herald Sun observed, a rise to nine per cent would add $298 a month to the average Australian $285,000 variable home loan and $517 a month to a $450,000 loan.

Meanwhile, it was reported this week that non-bank lender Mortgage House will next month launch a home loan equivalent to 105 per cent of a property's value as it looks to help first-time buyers enter the market.

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