Those who may be hit hardest by increasing interest rates don’t even own property, according to Domain chief of research Nicola Powell.
Powell says renters are the ones who may really start to feel the strain.
She says there is already a dire shortage of accommodation, with vacancies at rock-bottom levels, and if investors try to pass on all or some of the increased cost of their mortgages it is the renters who will struggle.
AMP Capital chief economist Shane Oliver says, with market conditions so tight and vacancy rates so low, tenants may not have too many other alternative properties to move to if their rent does increase.
“Or if they’d been saving up for a deposit, then it’s now going to be harder for them to buy,” he says.
RateCity research director Sally Tindall says tenants in areas where there are already shortages of rental accommodation may find themselves “throwing more money at rents” to keep their homes.