A senior Reserve Bank of Australia (RBA) official has said it would take about two years for the drop in house prices caused by interest rate hikes to offset increased mortgage repayments.
Speaking at Australian Financial Review’s property conference in Sydney, Reserve Bank of Australia’s head of domestic markets Jonathan Kearns said that the amount of money that home buyers could borrow decreased under higher interest rates, which would ease housing demand and cause dwelling prices to fall.
In addition, he said as house prices started to drop over time, the rise in mortgage repayments would be offset by smaller loan sizes….