If you’re a new homeowner with a whopper of a mortgage you’ll feel somewhat less positive towards rate hikes.
But a recent Domain article suggests property buyers should be thankful for interest rates. Here’s why:
“Australia’s housing affordability crisis is accelerating, experts say, but would be worse if the Reserve Bank hadn’t begun raising the cash rate in 2022,” Domain reports.
“Huge cuts to borrowing power caused by the steepest rate hiking cycle in 30 years have made affordability worse, particularly for buyers without access to the bank of mum and dad, but this had less of an effect than if house prices had continued to rise following the post-COVID housing boom.”
So rate hikes make housing unaffordable for some, but keep housing from becoming even more unaffordable for many. A necessary evil perhaps? Probably.
What are interest rates and property prices likely to do next?
Crystal balls are notoriously unreliable but in Brisbane at least, property commentators are tipping continued growth this year, at a solid, but not crazy fast pace.
Meanwhile the big banks are showing quite a bit of difference in their rate cut forecasts, with some tipping rate cuts at the end of this year and others suggesting we’ll be waiting to 2025, even into the second quarter.
So if you’re looking to buy, set a realistic budget and you’ll be well set to weather the interest rate ride.
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