An economist is warning home buyers that paying too much for a new house might come back to bite them.

The ANZ Bank is expecting steady increases in the Official Cash Rate, and for it to reach 1.25 percent by the end of 2023.

Independent Economist Cameron Bagrie told Kate Hawkesby if one-year fixed mortgages move from 2.25 to 3.25 percent, it's still a really low rate - but, it could hurt new home owners.

"Interest rates have started to move up already."  

He says getting interest rates off their lows is a good story for deposit holders, but it might be a wake-up call for over-leveraged buyers.

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