And then more could follow
With property prices continuing to soar, and bank after bank predicting double digit increases, ANZ Senior Economist Felicity Emmett is expecting momentum to slow later in the year – and for fixed interest rates to start creeping up. “We think fixed rate mortgage rates will rise in the second half of the year due to the end of the term funding facility and the likelihood that the RBA chooses not to roll the yield curve control,” she told the AFR.
“So even without a lift in the cash rate, the housing market will face higher rates as early as the second half of 2021, with a more significant tightening in 2023.”
“We’re expecting the regulator to step in with macroprudential controls later this year, which could see price growth slow in 2022,” she continued.
“The exact measures likely depend on how the market develops over the next six months, but we could see the regulator focusing on high debt-to-income loans and there’s also a possibility that they revert back to changing the buffers around mortgage serviceability.”
In its quarterly meeting, the Council of Financial Regulators has already flagged that it is keeping an eye on housing saying “The council places a high emphasis on lending standards remaining sound, particularly in an environment of rising housing prices and low interest rates.”
“It will continue to closely monitor developments and consider possible responses should lending standards deteriorate and financial risks increase.”
What the banks are predicting for house price rises:
ANZ
- Sydney – 19%
- Perth – 19%
- Hobart – 18%
- Melbourne – 16%
- Brisbane – 16%
- Adelaide – 13%
CBA
- Darwin – 18%
- Perth – 17.7%
- Brisbane – 16.6%
- Hobart – 15%
- Adelaide – 14.5%
- Sydney – 12%+
- Melbourne – 12%+
Westpac
- Perth – 12%
- Sydney – 10%
- Brisbane – 10%
- Adelaide – 10%
- Melbourne – 8%
- Hobart – 8%
