Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments
Monthly repayments could soon cost borrowers a lot more cash if Westpac’s predictions for rate rises do come to fruit...
A panel of financial experts has warned rates are likely to rise for the next three years, putting upwards pressure on investors’ repayments.
The survey conducted by finder.com.au asked 28 leading experts, including economists from the four major banks, when rates were expected to rise.
While the experts unanimously agreed rates would stay on hold in October, all predicted a rise next year.
Of the respondents, 46 per cent predicted a rise in the third quarter of 2015, 21 per cent in the first quarter and 18 per cent in the second quarter.
According to Michelle Hutchison from finder.com, the survey showed the cash rate would hit a “new normal” of four per cent in the next two to three years.
“About one in three (32 per cent) of the experts surveyed are expecting the cash rate to hit a ‘new normal’ by 2016, while 29 per cent are expecting it to happen in 2017.
“Only one respondent, chief economist at Commonwealth Bank Michael Blythe, is expecting a ‘new normal’ cash rate level to be reached in 2015,” Ms Hutchison said.
She encouraged investors to prepare now for rising repayments.
“If you’re an existing homebuyer or hitting the property market this mortgage season, make sure you prepare a buffer for when interest rates rise,” she said.
“This is the time when you should be paying as much as you can on your mortgage, to lower the impact of higher rates.”