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There is no doubting that the market leaders for real estate growth have been Sydney and Melbourne in the last few years – but how long will this last? According to research from BIS Shrapnel, Melbourne's house prices are going to start falling in the 2016/2017 financial year, while Sydney will experience the same transition.

This is due to a forecast rise in interest rates. BIS Shrapnel believes that the official cash rate and interest rates will only go up by about 50 basis points, but this is enough to temper borrowing and dampen the market.

Understanding where the market will weaken allows you to make the right decisions on where you are going to invest your money and if you are taking out an investment loan need to be aware of  the importance of preparing for higher payments down the line, and this is a role that Help with Finance can fill. ASIC are already putting the lenders under pressure to reduce their exposure to investment loans. The banks are responding to this by increasing their rates on investment loans and reducing their rates on Owner occupiers. Some banks are also taking the option of limiting investment loans to 80% of the value of the property.

The interesting thing that is happening is that lenders are all responding in different ways and some of the 2nd tier lenders are still do great rates on investment loans. Help with finance can identify the different criteria lenders are using to help you secure a competitive loan for you

Why will the interest rates rise?

Angie Zigomanis, senior manager with BIS Shrapnel has offered some logic for why interest rates will rise in particular in the report.

"Interest rates are expected to enter a tightening phase towards the end of 2016," he noted. "After recent wage constraint, the Reserve Bank is expected to 'fire a shot across the bow' to curb wage expectations and alleviate potential inflationary pressures."

In the June cash rate announcement, Reserve Bank of Australia Governor Glenn Stevens did note that they were closely watching the market for investment lending, as low interest rates were spurring credit growth in many areas, notably the housing market.

While the RBA board has judged the current market to be stable enough, clearly there will come a point where tighter regulation is required and these interest rates will move back up.

Staying on top of falling prices

There are some areas that BIS Shrapnel expects to see further growth through to 2018 – Brisbane, for example, as well as the Gold Coast and Sunshine Coast. However, the areas currently being attended to by investors are likely to slow down considerably.

This means consumers will need to make sure they understand property markets intimately, or engage professionals who do – especially when interest rates start rising. The variety of loan products allows Help with finance help Australians find affordable mortgages, even in a higher interest rate environment.

By collating products from credit unions, banks and a wide range of alternative lenders help with Finance is in a much better position to help house hunters than lenders that may only offer a single set of home loan products.

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