The sooner-than-expected rate hike may prompt investors and homebuyers to dive into
the property market before rates go even higher.
Real estate agents also dismissed comments that the small rate hike will derail the nascent recovery in house prices across Australia.
"This 0.25% rate rise was expected. I think we can afford a couple of interest rate rises and the confidence in the economy and the real estate market will override any concerns about where rates are headed Ray White Joint Chairman Brian White.
Jim Midgley, PRDnationwide national director said that recent rate hike will not have a material impact on the property market as investors and homebuyers have already factored it in their finances.
"I think people look at the total cost to them and it's really quite minor. I don't think we're going to see a great slowing in the property market unless rates go up by say 1% or more but that may not happen for sometime."
Midgley added that there will be a number of people looking to lock in purchases before rates go even higher. "Investors also think the market has already bottomed in terms of price and think now is a good time to look for good value property. I think investors are keen to get into the market and I don't think the interest rate hike will stop them doing that," he said.
The Reserve Bank of Australia lifted the official cash rates by 0.25% prompted by a slew of upbeat economic data released recently. If the lenders pass this latest rate hike in full, it will add an extra $48 a month on a $300,000 loan taken over 30 years.
The Commonwealth Bank estimate that more than 90% of its home loan customers are ahead in their loan repayments according to CommSec. That is, when interest rates were cut, most customers elected to maintain existing repayments.
"The main burden of the rate hike will hit those that have purchased or built homes relatively recently. And the higher loan repayments will certainly be factored in by budding home buyers in coming months. The housing market shouldn't be adversely affected by the small rate hike because it is the level of interest rates that matters, not the change in rates. Cash rates are still historically super-low, translating to affordable repayments. But budding home buyers need to do their sums. Rates will continue to rise over the next 12-18 months, probably between 1.5-2 percentage points," wrote Craig James, chief economist with CommSec.
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