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Ominous RBA rhetoric on rate rises a worry for homeowners
Words: Olivia ShyingProducer: Veathika Jain
Uncertain times lie ahead for more than a million homeowners as mortgage rates are set to double. The last RBA cash rate rise was in 2010, when it went up to 4.75 per cent.
The RBA governor Philip Lowe recently admitted that the central bank could “plausibly” decide to start the rate rises this year instead of 2023 or 2024.
Some economists are predicting the first rate rise to be as early as May, which would be right in the middle of the election campaign.
According to CBA’s economist Gareth Aird, the critical issue ahead for borrowers is the likely doubling in mortgage rates from about 2 to 4 per cent over the coming 18 months.
However, Australian Prudential Regulation Authority (APRA) will continue to ensure banks lend responsibly, as many borrowers have never felt the pain of sharp rises in their mortgage payments.
Despite the rate rise on the horizon, the economists of the big banks still forecast our dwellings will be worth more by the end of the year, albeit at a reduced pace.
Westpac says that the national house prices will rise just 2 per cent in 2022, while the prices will fall 7 per cent in 2023 and a further 5 per cent in 2024.
ANZ is forecasting average capital-city housing prices to rise 8 per cent in 2022 and a 6 per cent decline in 2023. 
These veteran economists acknowledge interest rate increases will generate changes in behaviour, which in turn will impact economic outcomes.

Original URL: https://www.heraldsun.com.au/web-stories/free/herald-sun/mortgage-rate-rise-a-worry-for-homeowners