Margaret Lomas

I think you're right, and it probably will be a 50 basis points increase if the economy hasn't slowed, and it's really not slowing yet.

I don't want to be one of those flippant people who says, oh, but we had much higher rates, and people need to be used to that, and 7% is more normal, because that doesn't help anyone who's currently in a situation where they now have to find extra money to be able to support that mortgage.

But I think it could be a good lesson for people,

in understanding that when they do go for a loan, there are two important things that I think people need to know when they are looking to buy a house.

The first one is that you shouldn't ever buy in an overheated market.

Because when it's an overheated market, you're likely to be buying either on the way up or when the market is just about to turn.

Because make no mistakes, markets always turn.

If you buy on the way up or when the market is about to turn, it's very likely that within the next 12 months you will have a property that's worth less than you paid, particularly when you factor in the fact that we have fairly high stamp duties in this country and that adds to your essential buying cost of that property.

So what you pay for that property is probably $30,000 or $40,000 or $50,000 more than the purchase price because of all of those buying costs.

Once the market turns, you can quickly lose equity in that property.

So that's the first thing.

If you're about to buy property, whether you're unsure of rates or not, whether rates are going up or going down, don't buy when the market is heated.

Wait that little bit longer.

The second thing to remember is that if you only just qualify for a loan, if you scrape in by the skin of your teeth and you have to use every available income source to prove to the bank that you can afford this loan, if you're using your family payments and your part-time job and your full-time job and every other scrap of income you can save,

scraped together and the bank only just qualifies you for that loan, then it is likely that you can't really afford that loan because there will always be a time when interest rates go up.

Buy a property when you've got a fair amount of margin built in so that these interest rate rise, while they're not nice or welcome, they don't hurt your bottom line as much and you won't feel that stress that you're going to have to have a forced sale.

I want to be able to say that it isn't necessarily the rate rise that is now making vendors wait.

We had a very overheated market in Sydney.

Coming in behind that, parts of Melbourne certainly heated up and so did Brisbane.

The result of that, of course, is property prices flew up and became much higher than they'd been in the previous two to three years.