Lower demand for housing as a result of higher interest rates and tighter lending is more likely to trigger faster and deeper price falls than any widespread mortgage defaults caused by the rising cost of credit, experts say.

‘‘An increase in the official cash rate would reduce demand for new mortgages and therefore property prices,’’ Eliza Owen, CoreLogic’s head of research, said.

‘‘Higher mortgage rates might put some people off purchasing while prices are still quite high, so prices are more likely to come down off the back of successive increases in the cash rate.’’

Some economists are forecasting interest rates to rise by 1 percentage point by the end of the year and by another percentage point next year, with the first increase tipped to come as early as Tuesday.

A calculation by comparison site Rate City shows that a 1 percentage point rise in the cash rate would slash borrowing capacity for someone earning $100,000 a year by $75,600 and a couple earning a combined salary of $150,000 by $111,100. A 2 percentage point lift would limit a single borrower by $139,700 and would cut a couple’s mortgage amount by $205,400.

‘‘Anyone borrowing at capacity will see their budget shrink, which could be enough to cool things down, particularly in property hotspots such as Sydney and Melbourne,’’ Sally Tindall, RateCity research director, said.

‘‘Rising interest rates will significantly decrease how much the bank will let people borrow. This will have a flow-on effect on property prices, as many prospective buyers will no longer be able to bid as high.’’

SQM Research managing director Louis Christopher said rising mortgage rates and higher assessment rates could knock potential buyers from the market.

‘‘Buyers tend to stay away from the housing market when rates are rising, but more people are going to be rejected by the banks because they haven’t met the higher servicing test,’’ he said. ‘‘Fewer buyers will definitely qualify for a loan if interest rates rise by 2 per cent.’’

Rough estimates by AMP Capital suggest that a 1.5 percentage point to 2 percentage point rise in mortgage rates would reduce home buyer borrowing power and the ability to pay for a house by 10 to 15 per cent. ‘‘Demand for housing is going to be affected immensely, simply because people won’t be able to borrow as much as they did in the past,’’ Shane Oliver, AMP Capital chief economist, said.

‘‘This will have a greater negative impact on prices than defaults by existing mortgage holders because many households are already ahead of their repayments and still pay lower interest rates than new borrowers.’’

Maree Kilroy, senior economist with BIS Oxford Economist, said the buildup in household savings and strong economy would reduce the risk of homeowners defaulting on their loans.

‘‘The risk of homeowners defaulting, which would cause prices to fall more than expected, will likely be mitigated by a strong jobs market,’’ she said.

‘‘We expect the unemployment rate forecast to hold below 4 per cent and almost two-thirds of owner-occupiers have increased their mortgage payment buffers since the onset of the pandemic.’’