Mortgage interest rates to hit 8.5 percent

Home loan interest rates will reach 8.5% by 2011, adding about $300 per month onto repayments for the average sized mortgage say leading economists.

Economic growth is expected to surge next year to well above three per cent, forcing the Reserve Bank of Australia to push up the official cash rate from 3.75% currently to 4.75% next year and 5.5% in 2011.

If this scenario comes true, Westpac’s standard variable mortgage could reach 8.51%. NAB’s would climb to 8.24%.