The housing market boom will come to a “definite end” next year and the Kiwi dollar may rise back to US81c because of higher interest rates, economists predict.
Independent economics group Infometrics’ latest forecast picks the Reserve Bank to raise official interest rates twice, to 8.75 per cent, within the next six months to hold inflation under 3 per cent.
That would push fixed mortgage rates above 9 per cent and hit the housing market, which has already suffered a big slump in sales volumes and flat median prices in the past few months.
Most two-year fixed rates are just above 9 per cent already, and longer-term rates recently rose to just under 9 per cent.
Further rises would “constrain” the housing market, Infometrics says.