It should come as no surprise that interest rates are likely to start rising from about April next year. Last week the Governor of the Reserve Bank, Graeme Wheeler, reaffirmed that outlook but was more specific about the size and speed of interest rate rises.
Radio New Zealand reported, “The Reserve Bank says the
official cash rate could increase by 2% from 2014 to the beginning of 2016,
which could mean interest rates on first mortgages of 7 - 8%. The central bank
says if the Loan Value Ratio restrictions do not slow house price inflation,
larger increases in the benchmark interest rate would be required.” In other
words, expect interest rates to rise by 2% over the next two years, and more
and faster if the property market (in Auckland) continues to charge ahead at
10% a year.
