RBA to hold but banks to hike rates: survey

However, murmurs of a cash rate rise are gaining momentum, with 68 per cent of panellists surveyed on this question (23 of 34) believing the next RBA cash rate move will be up, which has risen from 58 per cent last month.

While economists expect minimal cash rate movement this year, the vast majority of panellists (90 per cent) believe further out-of-cycle rate hikes will take place in the near future.

Finder.com.au insights manager Graham Cooke says future out-of-cycle rate hikes means first home buyers need to practice their due diligence.

“With banks likely to lift mortgage rates out-of-cycle, the onus is on first home buyers to factor in potential rate rises to their budgets. Generally, mortgage holders should account for 2-3 per cent on top of their current repayments to avoid rate shock,” he said.

Mr Cooke pointed to new research that shows the value gap between first home buyer and non-first home buyer loans has peaked to record highs. Non-first home buyer loans were 20 per cent ahead of first home buyer loans at the end of 2016, which is nearly double the gap in 2014 (11 per cent).

The majority of experts surveyed on this topic (81 per cent) expect the gap between first home buyer and non-first home buyer loans will continue to widen.

Mr Cooke said this trend could push first home buyers to outer fringe suburbs in an effort to find more affordable housing.

“This trend indicates that the market is running away from first time buyers, as many young couples may be forced to look to the city outskirts to purchase their first home.”

[Related: Australians in the dark on mortgage rates]