No fall in house prices until interest rates go up – economist

PHOTO: Sharon Zollner on The AM Show.Getty/The AM Show/Newshub.

One of the country’s biggest banks is picking house prices won’t fall until interest rates rise.

The Reserve Bank on Wednesday will release its latest financial stability report, the first since the Government told it to start taking house prices into account when setting monetary policy.

“They will be obliged to talk more about that, which will be interesting,” ANZ chief economist Sharon Zollner told The AM Show.

The Reserve Bank has kept interest rates very low to stimulate borrowing to help the economy get through the shock of COVID-19. Unfortunately for would-be first-home buyers, much of the borrowing has gone straight into the housing market – pushing up prices faster than ever before to new record highs. 

Zollner said it’s unlikely the Reserve Bank will unveil new tools on Wednesday designed to rein in speculators, such as debt-to-income ratios or caps on interest-only lending.

READ MORE VIA NEWSHUB