Meanwhile, the variable home loans allow borrowers to pay in varied amounts according to the changes of the official cash rate. Since market conditions change from time to time, more borrowers opt for this loan in hopes of low repayments.

Likewise, the interest rate of a variable home loan will go up if the RBA official cash rate increases. Since a variable loan has more flexible features as compared to a fixed loan, variable loans usually have higher interest rates to shoulder these features.

If you cannot decide on one home loan, you can also have a split home loan which has the characteristics of both a fixed and variable home loan. With a split loan, you can pay part of your loan on a fixed rate and the other part on a variable rate. This type of home loan makes repayment faster as well.

On the other hand, interest only home loans let you pay only the interest rate of the home loan for a period of one to five years. After which, you must start paying off the principal and repayments of the loan amount.

Interest-only home loans can initially cut the expenses needed when purchasing a residential property. This cut then allows you to use the money saved towards other expenses. On the downside, lenders will weigh your capacity to shoulder the loan through your repayments and this can limit your chances of borrowing more funds.

Honeymoon home loans start with a low starting interest rate for a honeymoon period that usually lasts for six months to one year. After which, the rate reverts to normal rates and the principal amount must be paid off. First home buyers and businesses that are starting up opt for this deal to give them more savings in the term’s initial years.

Meanwhile, a no deposit home loan allows you to borrow the full amount of the property’s purchase price. Finally, an equity home loan or Line of Credit home loan has a continuing pre-set limit that is fixed. The money that is saved in the line of credit loan can be used for shares and renovations of a personal or investment property. However, its interest rate is higher as compared to the standard rate and this deal can bring a lot of financial problems if it is misused.

Experts predicted this forecast due to rising interest rates and the First Home Owner Grant removal. These developments will have a big impact on the lower end properties. However, middle and upper end properties will get a boost from buyer trading, population, immigration growth and a steady economy.

Experts also foresee that the areas that will have the highest property price hikes are the places where the First Home Owner Grant has been more popular. This development is possible due to the domino effect that it can bring to the market.

John Edwards of the property research company Residex stated that a steady growth is possible for the $500,000-$600,000 properties in Melbourne and Sydney for the First Home Owner Grant has become popular in these cities.
He also predicted that property prices in Melbourne will go up by around six to seven per cent and this can make rental prices rise as well. Edwards also added that since that the value of the lower end properties grew 15 per cent in 2009, owners can possibly use that equity to trade up for middle end properties.

Meanwhile, Matthew Bell of the Australian Property Monitors predicted that the prices of the middle end properties throughout the country will go up by seven to ten per cent. He also added that once interest rates reach the 7.5 – 8 per cent mark, it will not be a negative aspect in the escalating property values.

Bell pointed out that the property price fall from March 2008 to March 2009 is due to the global financial crisis and not on the rates.
On the other hand, AMP Capital Investors Chief Economist Shane Oliver stated that property prices have already been high for six to nine months and that it is difficult to raise property prices for it can take out the affordability of some properties.