Prime Minister Kevin Rudd has warned home buyers that interest rates will rise as the economic recovery gets underway.

The Reserve Bank slashed interest rates to 49-year lows from last October, as a global banking crisis froze credit and threatened economic disaster.

Since then, government stimulus packages have encouraged first home owners back into the market – but the Australian Bureau of Statistics shows the average mortgage has gone up to around $282,000 for first home buyers.

Financial markets expect the cash rate to begin rising early in 2010 and to hit 3.4 per cent in a year's time.

The Prime Minister has warned interest rates may rise quickly, so home owners and property investors should be prepared for how they will cope when rates rise.

 

 

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Tags: Interest Rates, Investor, Mortgage, Reserve Bank

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