Interest rates expected to rise for three years, here’s when the first hike will be: Finder

Interest rates expected to rise for three years, here’s when the first hike will be: Finder
Interest rates expected to rise for three years, here’s when the first hike will be: Finder

With no rate hike expected this afternoon, according to Finder’s panel of 28 experts, there is a rate hike expected for the next three years.

The 28 experts surveyed unanimously agreed that there will be no rate change today. However all forecast a rate rise next year and many subsequently pointed to a gradual upward cycle for three years.

When will the hikes begin? June 2015.

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This prediction, from Finder, notes that 46% of experts believe that there is a chance of an increase in the third quarter of 2015.

Here are their predictions:

Interest rates expected to rise for three years, here’s when the first hike will be: Finder

Source: Finder

And what will the new normal be?

Interest rates expected to rise for three years, here’s when the first hike will be: Finder

 

Source: Finder

Money expert for Finder, Michelle Hutchison, said that buyers should be cautious with borrowing levels as a result.

“The Finder.com.au Reserve Bank Survey sentiment revealed that many factors will keep the cash rate at the current low level of 2.50%. Inflation being subdued, the low Australian Dollar, and damage to property markets outside Sydney and Melbourne should the cash rate rise too soon.

“However, the good times for property buyers are not expected to last much longer, with our survey showing the next rate rise being forecast for June 2015, and a 21 percent chance that the cash rate will start rising from the first quarter of next year,” she said.

With a gradual increase, 11% of the panel believe the cash rate will hit the historical average of 5%. The majority expect a new normal below 5%.

This is expected to occur by 2016, according to 32% of experts, or 2017, chosen by 29%.

“Only one respondent, Chief Economist at Commonwealth Bank Michael Blythe, is expecting a ‘new normal’ cash rate level to be reached in 2015. The remaining respondents were unable to comment,” she said.

“If you’re an existing home buyer or hitting the property market this mortgage season, make sure you prepare a buffer for when interest rates rise. This is the time when you should be paying as much as you can on your mortgage, to lower the impact of higher rates.”

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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