The bank’s forecast was for the official cash rate (OCR) to peak at 1.5 per cent in late 2023, or early 2024.
Though that meant home loan borrowers would face higher repayments, mortgage rates were not expected to return to pre-Covid levels.
“This suggests that mortgage interest rates are likely to settle at historically low levels, but at rates slightly higher than our earlier forecasts,” Tennent-Brown said.
Each percentage point rise in the overall rate a borrower pays, for example a rise from three per cent to four per cent, results in an extra $1000 a year for every $100,000 they owe.
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