The RBA could be forced to bring forward its rate hike target due to better-than-expected economic recovery.
"But despite this, there's a virtuous cycle of rounds of much larger than expected fiscal stimulus, resulting in the economy and labour market booming, underpinning a materially better than expected budget 'starting point', then allowing for even more fiscal stimulus. Any rise in interest rates could pose considerable risk to new buyers who have taken on large mortgages in the wake of the COVID-19 pandemic.
"One note of caution, however. In extremely low interest rate environments that create soaring house prices, government incentives to enter the housing market with very little deposit mean that some people could end up with a negative equity position when interest rates rise again and property prices fall or correct," Mr White said.