Interest rates 'to soon nudge double digits'

Mortgage rates could rise close to ten per cent within 18 months if the government’s optimistic economic forecasts are fulfilled.

In its latest Budget, announced this week, the government pointed to strong economic growth and rising employment over the coming two years – a forecast which has led many economists to predict further sharp interest rate rises during the period.

Speaking to the Daily Telegraph, Macquarie interest rates strategist Rory Robertson said: "If the official family – Canberra, the RBA and Treasury – are right about four per cent growth and sub-five per cent unemployment ahead, then we can expect the RBA’s cash rate, mortgage rates and business borrowing rates to rise by another two per cent or so over the next 18-24 months."

Such a two per cent hike would push the average variable rate to "within a whisker" of ten per cent, the newspaper observed, and could prompt more Aussies to compare home loans and refinance as repayment problems mount up.

Meanwhile, it was also reported this week that homebuyers in New South Wales are to be hit with a new property tax following the Budget that could significantly hike up the price of a standard house.

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