Rich Harvey

It's not that the current boom was just caused by low interest rates.

That helped to fuel it, but it wasn't the only factor.

There's a number of factors that cause economists to change their mind because the economy and the data keeps changing.

Yeah, great question, Amy.

We've had a massive overreaction by the media to the consequences of these initial two rate rises.

And the media always exaggerate the impact of these rises and create this sort of atmosphere of basically doom and gloom.

But the reality is the RBA needs to get back to what they call the neutral interest rate.

We've had two interest rate rises.

We've still got very, very low interest rates.

We're not at that very high factor straight away.

And we're not going to go to that neutral rate, I think, which is around 2% to 2.5% immediately.

In the borrower's favour is the major lenders have said that the borrowers are well ahead of their repayments.

The borrowers have built up massive savings during the COVID period.

know anz westpac bankwest they reckon that their customers are around 90 ahead on their repayments and the other thing that happened when interest rates were low a lot of borrowers could have actually stopped repaying their loans there was a loan period of grace to not repay but most people didn't do that they kept on making repayments at the same level as when interest rates were higher so there's significant buffers in the system and even when you go to borrow money today apra have asked

the lenders to assess the borrower's ability to repay loans on a much higher rate, at least 3% above the current rate.

So instead of assessing someone today at 2.5%, they'll be assessed at a 5.5% rate, and they'll always be that 3% buffer rate, no matter where interest rates go to.

So you're seeing a lot of media headlines saying that there's going to be mortgage stress, it's going to be rampant and all this other clickbait stuff, which is rubbish.

A lot of these propositions are put forward by attention-seeking economists or journalists and suggest that rising rates means a dramatic fall in prices.

Look, there's no doubt that it's having a negative impact on prices.

And in fact, prices have come back, I think, around 8% to 10% in a lot of areas.