8% mortgage rates, a recession and 6% unemployment projected

The Reserve Bank has put the OCR up 75 basis points in an attempt to get inflation under control.

They project the OCT will reach 5.5% which historically will mean mortgage rates of 8%.

They also project unemployment will also double to 6% and that we will spend 12 months in recession.

What is the difference between 3% mortgage rates and 8%?

On a $500,000 mortgage your repayments at 3% are $2,108 a month, for a 30 year term.

At 8% the repayments are $3,669 a month so an extra $1,500 a month or $18,000 a year.

They also project house prices will dip to 30% below the peak, so there will be mortgagee sales.

There is a lot of pain coming.