PHOTO: Some banks are picking the official cash rate to go up next year to 1.25 percent
A financial expert doubts the Reserve Bank is going to raise interest rates too much despite growing inflation, because it’ll destroy the housing market.
Interest rates are at record lows, driving up house prices and making it cheap to borrow. They were already relatively low, encouraging spending in the post-global financial crisis years, but fell to 0.25 percent as COVID-19 hit last year.
As a consequence, house prices skyrocketed – Kiwis seeing it as a safe investment as stock markets fluctuated.
Mark Riggall of Milford Asset Management told The AM Show on Thursday despite prices doubling since before the global financial crisis, repayments have remained about the same.
“The monthly repayments on those mortgages are actually the same, if not lower. We’ve enjoyed a huge benefit of falling interest rates, but of course we have to pay more in mortgages.”
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