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ASIC warns new borrowers on rates

ASIC warns new borrowers on rates

The corporate watchdog is urging potential borrowers to be careful about the interest rate they agree to when taking out a mortgage, saying it won't stay there for ever.

With Treasury boss John Fraser this week warning of a housing bubble in Sydney and parts of Melbourne, Australian Securities and Investments Commission chairman Greg Medcraft says new borrowers should be doing their numbers on a seven per cent interest rate rather than four.

"It is also a message to lenders, you are not being fair .... to that borrower if your are using a rate that is not realistic longer term," he told a Senate estimates hearing in Canberra on Wednesday.