September 19, 2022 3:00pm by David Farrar

Where will interest rates end up?

We have changed our OCR call. We now see the OCR peaking at 4.75% (previously 4%), with 25bp hikes added to our profile in February, April, and May next year. https://t.co/ssqGTtLYb6 pic.twitter.com/tfmAXwnnCZ
— Sharon Zollner (@sharon_zollner) September 16, 2022

If ANZ is right and the OCR hits 4.75% next year, then what will that do to mortgage rates?

The OCR was last above 4.75% (was 5.00%) in December 2008. The floating mortgage rate then was 8%.

The median house price is $800,000 so with a 20% deposit, a typical mortgage would be $640,000.

At a 4% mortgage rate, the monthly payments will be $3,055 and total interest would be $460,000.

At an 8% mortgage rate, the monthly payments would be $4,696 and total interest would be $1.05 million.

There is going to be a lot of pain next year.