Rising Inflation: What it means for mortgages and the property market

You would have noticed it at the petrol pump, and the cost of your weekly shop has increased. Inflation shot up to 5.9% in the quarter to March 2022, the highest it’s been since 1990. Household budgets are being stretched. But what does inflation mean for mortgages and the property market? 

Impact of inflation on the property market  

One direct impact of inflation is the rising cost of construction. Huge demand for building materials, supply chain disruptions and a tight labour market has seen costs soar. 

The combination of tighter lending conditions brought in by the CCCFA, debt-to-loan income caps, and LVR changes are starting to impact house prices. 

Impact of inflation on mortgages

Rising inflation means the cost of borrowing goes up.  

One thing for sure is any increase in the OCR will trigger a fresh round of hikes to mortgage interest rates.

What can I do?

Cutting back on spending and shopping around are tried and tested ways to ride out inflationary headwinds. Plus, good people are currently in short supply, so now may be the time to ask your boss for a pay rise.

With mortgages taking up a big chunk of household budgets, you may well be wondering what’s the best option for you. 

Contact your Prop'd Up Adviser today for personalised, expert advice.