Making Sense of a “Storm of Opinions” Surrounding Interest Rates

26th Jul, 2022 | Articles, First Home Buyer, In The News, Refinance

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It's unavoidable right now: 'interest rate rises creating mortgage panic' seems to be the headline across various publications each week.

ANZ recently announced that it is forecasting rate rises to continue every month until Christmas. If this prediction plays out, the official cash rate will be at 3.35% by the new year.¹

It’s well known that we are seeing interest rate rises due to the rising cost of living and inflationary pressures. Mark Bouris recently appeared on Channel Nine’s 60 Minutes to address the issues affecting the homes of many Australian mortgage owners.

When asked about why we’re seeing a sudden and sharp increase to interest rates, Bouris said it was the only option the Reserve Bank of Australia (RBA) has to try and slow down inflation: “The general consensus, in terms of mortgage pain, is that we will see mortgage pain for the next two years.”

“After that period, it’s quite possible that interest rates might start to come off, that is, come back to a more normalised rate.”

According to Bouris, the issue is: “When inflation is doing what it’s doing at the moment, in other words, it’s going up, the people who bear the brunt of repairing the inflationary spike, are the people who borrowed money to buy a house.”

Despite stating that he’s never seen such complicated and uncertain times for borrowers, Bouris says: “Now is the time for building strategies and not panicking. Your strategy has to be about saving money in everything you do, to make sure you can continue to pay your mortgage, if that’s what you’ve got.”


“Storm of opinions” not helping

Speaking to Sky News, Bouris took the opportunity to point out that despite some forecasts of drastic rate rises into the new year, other respected economists are predicting less severe increases.

Bouris said, “It seems like we’re getting hit up with a data storm and an opinion storm from everyone across the board.”

Despite ANZ predicting the official cash rate will hit 3.35% by the end of this year, Bouris said he tends to agree with the forecasts from CBA and Westpac: “They both have come out more recently and indicated a half a percent increase in the August meeting (next week), another half a percent following that (in September) and an 0.25% increase by the end of the year.”

“That would take the official cash rate up to 2.6% which seems to be the market consensus that the Reserve Bank would like to set the cash rate, around 2.6%, and then sit there and wait to see what happens sometime next year.”

Even if that is an accurate prediction, Bouris said that it is still “a steep rise” and we are likely “going to see an uptick in people having to sell their property. I think we will see an uptick in what they call defaults, arrears or delinquencies”, as higher interest rates will mean every Australian mortgage owner will owe more each month.

However, Bouris doesn’t expect to see “a great number” of Australians failing to meet their mortgage commitments.

“We’ve been through these processes over the last 30 or 40 years in Australia,” he said, “so I don’t expect anything outrageous to happen here. There’s not going to be a bloodbath.”

If you’re looking for ways to save on your mortgage in a rising rate environment, click here to learn about five ways you may be able to protect yourself against rate rises.

To view Mark’s appearance on 60 Minutes, click here.

Be sure to speak to a Yellow Brick Road Home Loans mortgage broker about your options and get them to do the heavy lifting. They can shop around for the best deal possible and give you the guidance you need. With a little bit of preparation, you can weather any rate rise storm.

If you have any questions, reach out to our home loan experts today!


1. ANZ Predicts Rate Rises through to Christmas
2. Major Banks Cash Rate Predictions

Learn how much you can save through refinancing.

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