How high will interest rates go?

The short answer is – your guess is as good as mine.

The long answer is that banks are now stress-testing loans at a hypothetical interest rate around 8.15%.

It’s not a prediction, but it does give you some idea of where the Reserve Bank thinks rates might end up.

Those of us who remember the 1990s will recall paying 9% and more. Yes, it was a different time, and house prices were lower. However, incomes were a lot lower too. Somehow, we coped.

Interest rates do matter, and we’d all prefer to pay less rather than more. However, they are only one factor in the equation. Remember that house prices are no longer rising by leaps and bounds because of the cheap money that previously flooded the market. Many young people are now earning high incomes due to the tight employment market. These factors can balance each other out.

If you can live within a reasonable budget and keep making repayments, the interest rate on your mortgage shouldn’t matter too much. You just need a game plan to achieve your goals.

As always, we’re here to help you work out the right strategy with interest rates. And to help you get the house you want.