How Rising Interest Rates Impact The Property Market

For Immediate Release


  • Rising interest rates are predicted to stabilise the market in the coming months
  • Some borrowers are more prepared for the interest rise than others
  • First home buyers and people new to the market are going to be impacted the most
  • Borrowers are encouraged to be diligent and financially responsible as interest rates rise

Rising interest rates have been a hot topic in the media recently. The Reserve Bank of Australia has increased interest rates by 0.25% (from 0.1% to 0.35%). What does this really mean for homeowners? Are thousands of first home buyers going to default on their homes? Is the property market going to crash? The simple answer, no.

A chart illustrating interest rates from Info Choice, shows that historically rates have been between 5-6%. The rise in interest rates will impact buyers in the market in different ways. “The rise in interest rates won’t crash the property market, but it will stabilise and plateau out for a while”, says Nidal Rasheed, Property Coach and Managing Director of Silvertail Property Group. Properties on the market will take longer to sell and property values will be determined by what someone is prepared to pay. It will also slow down new buyers in the market from borrowing too much.

First home buyers and people new to the property market are going to feel the impact the most. Due to interest rates being so low, first home buyers and people new to the market may have overcapitalised on their investment. This group of buyers are being cautioned to be diligent and financially responsible as interest rates are beginning to rise.

Investors who bought properties prior to the boom have greatly benefitted from low interest rates. In fact, most of these investors are now ahead of their mortgages. “Some borrowers are much better prepared than others. About 40% of borrowers have used the last few years to make extra repayments because they already had a loan and are now well ahead”, says Dr Shane Oliver, AMP Capital Chief Economist. “Investors are building equity in their properties quicker, and in the long run saving on interest”, says Mr Rasheed. 

People who own their homes outright aren’t directly impacted by the interest rise. If someone who owned their home outright decided to sell, they can afford to wait until they receive an offer for the price they desire.

On the flip side, if someone new to the market is highly leveraged and decided to sell, they’ll need to sell their property quickly. In this case, vendors are prepared to take discounts to sell properties in a short amount of time for the closest price.  

As there is still a housing shortage in Australia, rising interest rates alone isn’t enough to crash the property market. But it will impact buyers in different ways. Buyers looking to buy their first home or investment are encouraged to be diligent and financially responsible when it comes to taking out a home loan. Along with getting professional advice.

Silvertail helps buyers enter the property market, and over the long term grow a profitable property portfolio. For more information, visit or follow Silvertail Property Group on Facebook, Instagram, and LinkedIn.  

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