Aspiring home owners and up-sizers are being warned to think twice about taking on large mortgages even though interest rates are at record lows.

All 40 economists and property analysts surveyed by comparison site Finder believe the Reserve Bank will keep the official cash rate on hold at its monthly meeting on Tuesday.

RBA governor Philip Lowe has previously said the official rate is unlikely to rise for at least another three years.

But 16 out of 28 Finder experts tipped banks to increase rates on variable loans even if the official cash rate stays at 0.25 per cent, as profits have suffered at the hands of mortgage deferrals, fewer first-home buyers, record-low rates and weak credit growth.

“This may send banks scrambling to recoup lost funds by pushing up home loan rates to absorb some of these costs, which will come at a detriment to mortgage customers,” said Finder insights manager Graham Cooke.

A flat cash rate does not mean home owners are in the clear. We learned this during the most recent period of cash rate stagnation.

“While the rate held at 1.25 per cent for 34 months starting in 2016, banks increased their variable rates seven times.”

Mr Cooke said prospective buyers should factor in the possibility of rates rising by another 2 or 3 percentage points before taking on a new loan.

Although hikes of that magnitude are unlikely in the near term, Centaur Financial Services director Hugh Robertson said households should use long-term averages to decide whether they can afford a home, as mortgages normally last for at least 25 years.

This would mean only taking on a loan if you can afford to meet the monthly repayments at 5 or 6 per cent interest, he said.

“What you don’t want to do is buy now at a great interest rate, but then have to sell it in the future,” Mr Robertson told The New Daily.

“You don’t ever want to be a forced seller.”

Mr Robertson advised first-home buyers and up-sizers to think about the bigger picture of their lives, describing the narrow fixation on interest rates as “first-level thinking”.

Given buying a home is a long-term commitment, borrowers should consider whether they have stable jobs, and how their home purchase will affect their stress levels and lifestyle more broadly, he said.

And if first-home buyers are thinking about having children in the near future, they should work out if they can afford to service the mortgage with one income, as opposed to two.

“It’s got to be realistic and fit within your overall personal financial plan,” Mr Robertson said.

“Just because a bank says you could borrow $800,000 doesn’t mean you should borrow that. And for anyone who is just starting out, we would say start with something that’s affordable and not your forever home.”

Data released by Canstar on Monday shows 28 lenders have made cuts to 116 variable home loan rates since July – by an average of 0.20 per cent – while just one lender has increased them.

Added to the numerous government incentives on offer, such as $25,000 grants for new-home building and loan guarantees of up to 15 per cent of the purchase price, this rate-cutting is tempting some Australians to think seriously about buying a home for the first time.

But Mr Robertson advised prospective buyers – and especially those without concrete plans – to wait on the sidelines for another six to 12 months, as the full effects of the pandemic have yet to be seen and most analysts believe house prices will continue to fall.

“Right now, I don’t think it hurts to hold off,” he said.

“Everyone says, ‘yeah but the government’s giving me this, the government’s giving that’.

“But it’s kinda like being on a diet and someone offering you free McDonald’s.

“It’s free, but it’s against what I actually want to achieve right now. So it’s really about knowing what you want to achieve.”