 When will rates climb?
Reserve Bank governor Glenn Stevens has warned homeowners to prepare for higher rates. With interest rates at record lows, economists believe rates could rise to 5 per cent or more by next year.
Repayments on a $300,000 loan could increase from $1819 to $2191 a month with a 2 per cent rate rise.
But as the economy regains strength, the RBA will most likely to moving to raise rates again. Mr Stevens is a realist about the future for rates.
"This may well turn out to be one of the shallower recessions Australia has experienced," he told a parliamentary hearing.
Mr Stevens would not comment on when rates may rise, or by how much, simply indicating that interest rates were at 50 year lows and that rises were inevitable. First home buyers may be the hardest hit by any rate rises. More than 100,000 Australians have taken out loans since the grants were doubled late last year.
Mr Stevens says all home owners should prepare for 2 per cent interest increase. Most lenders look to see if people can afford this when approving a mortgage.
The RBA'S warning to borrowers came as ANZ fell into line with the other major banks, raising rates on most of its fixed interest mortgages.
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