CANBERRA, AAP – Potential home buyers and their lenders will have to factor in bigger mortgage payments, even though official rates are unlikely to rise until 2024.

The Reserve Bank board has made it clear that any decision to pull the rate trigger will be dictated by progress on wages and inflation, which are still depressed.

The official cash rate remained on hold at 0.1 per cent after the monthly board meeting on Tuesday, and the banking industry will continue to get cheap funding from the RBA’s slightly tweaked bond-buying program.

“It is unlikely that the cash rate will be increased before 2024,” governor Philip Lowe said.

But the tide has already turned for two to three-year fixed rate mortgages, market pundits say.

Rate City’s Sally Tindall said there are still some rates under 2 per cent, but not for long.

“In a matter of months, they could be extinct,” she said.

The average mortgage holder with a $500,000 loan fixed for two years at 1.94 per cent, could see that rate almost double when it expires, which would increase monthly repayments by close to $400.

Westpac’s chief economist Bill Evans said he still expects the first rate hike to come in March 2023, much earlier than Dr Lowe’s “central scenario”.

Virus uncertainty and lockdown fatigue may be rife, but the RBA said the experience to date has been the economy bouncing back quickly once outbreaks are contained and restrictions are eased.

It remains committed to full employment of close to 4 per cent, compared to just above 5 per cent now and pre-pandemic levels of 5.1 per cent.

Wages are also crucial, with three to 3.5 per cent the goal to drive inflation into the 2-3 per cent target range.

The last time wage growth was above 3 per cent was a decade ago.

Speaking to economists and journalists during a rare conference call, Dr Lowe said he doesn’t expect wage growth to suddenly shoot up.

The central bank is also wary of the already high level of household debt, and rising property prices in cities and regions.

Along with the Australian Prudential Regulation Authority, the RBA board is carefully monitoring the housing market, credit growth and lending standards.

“What neither APRA nor the Reserve Bank want to see is credit growing too quickly relative to people’s incomes,” Dr Lowe said.

While Canada and New Zealand are looking at raising interest rates as soon as 2023, Dr Lowe said Australia’s conditions are different.

Wages had fallen more here than other places, and had stepped down again during the pandemic, while inflation had been below target for “too many years”.

He said while the economic recovery has been better than others, the outcome for wages has not, and that means Australia will keep the stimulus going for longer than other countries.

“From an investor perspective, monetary policy remains ultra-accommodative,” CommSec senior economist Ryan Felsman said.