What Will Happen If the Interest Rates Rise In Australia


In Australia, interest rates are stable at 1.5%, the lowest level in its history. And the Reserve Bank of Australia (RBA) has left the interest rate constant at 1.5% on its last meeting held on September 5th.

According to the authorities and experts, Australian economy wil gradually grow over the next coming years. In addition to this, the inflation rates are estimated to rise in parallel with the healing of the economy.

interest rates for mortgage will rise up in Australia

What happened in real estate prices in the last 5 years?

The real estate prices are increased very fast in the east coast of Australia especially in Sydney. This was because of the main idea to heal unemployment rate especially in West coast. Behind this idea, this expectation stays, by increasing the construction and housing sector in east coast, the shift of the unemployed West coast people to the east coast  could be achieved. And this will cause a decrease in the unemployment rate. Partially this idae has worked out. And the unemployment rates are down. However this has caused a brand new problem whic is more dangerous than the former, very high level of household indebtedness.

Unemployment rate is declining!

Other figures about  Australian economy also support the growth expectation of the economy in coming years. Especially, according to latest data, in recent months the employment rate is accelerated in all states.

Household indebtedness is rising!

The experts warns that the household indebtedness levels are rising and this situation increases of the risks in credit conditions. The Austarlian economy’s main risks are this indebtedness level and relatively high house prices.

Real Estate Prices in Australia

What if the interest rates increase?

As mentioned above, interest rates are at historically low level in Australia, and it still remains same in last ten months. However, it is more likely tor rise in the next coming years than the opposite. At this point, there comes a vital question in mind: What if the interest rates increase? To answer this question we should analyze the real estate prices in recent years.

Current interest rates in Australia

Australian homeowners are very vulnerable!

According to the experts, a small amount of an increase in the interest rates could bring destructive effect to the Australian homeowners. If there is a one percent increase in the interest rates, this will add approximately 2000$ annually in the payments to a 300,000$ mortgage.

Additionally, if the interest rates rise to the 2.5% level, it is claimed that the Australian banks wil feel financial pressure.

Experts are warning!

Experts are warning not only Australian, but also all people who wants to buy a house with mortgage, that to buy a house only if you have at least half of the price of it. And the monthly payments of your morgage must be less than 30% of your monthly income.

Attention Here: North Korea Problem

Attention Here: North Korea Problem

Here, we share information about the interest rates, however, you have to remember that, international issues such as the tension that North Korea has created, or the upcoming decisions of the FED or any other surprising fact that could affect the rates.

We will continue to share all developments related to interest rates in global markets and especially in Australia for our readers.


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