That figure is based on calculations by comparison website Canstar, based on the median house price for Launceston and Westpac predictions on an official cash rate rise of 1.65 per cent by March 2024.

If variable rates rise by 0.5 per cent by the end of 2022, as many economists have predicted, Launceston households who bought near the current market peak could be faced with paying an extra $120 per month if banks, as expected, chose to pass the full increase on to consumers.

Variable mortgage rates are linked to the official cash rate, as it dictates how much banks can borrow money for from institutional lenders.

Reserve Bank Governor Philip Lowe conceded this week that it is "plausible" that the official cash rate would rise this year, however many economists are using far stronger language.

Tasmanian-based economist Saul Eslake said that recent inflation figures had led him to a predict a 0.5 per cent rate rise in official rates by year's end.

"I didn't think [rates would rise in 2022] until last Tuesday's higher-than-expected Q4 inflation numbers, but now I do ... I think the RBA will likely raise the cash rate by 15 basis points, ie. to 0.25 per cent, in August and by 25 basis points, to 0.5 per cent by November," he said.

Mr Eslake said it was difficult to predict how many borrowers would be affected by changes to variable rates, with the ABS no longer publishing a breakdown of whether new mortgages were fixed or variable.

"Traditionally, most Australian mortgages have been at variable or floating rates, in contrast to the US, for example, where almost all mortgages are at fixed rates. But fixed rate mortgages became much more popular after the onset of COVID-19 when bond yields and hence fixed rates fell more than variable rates," Mr Eslake said.

Despite the potential for variable rates to rise, Mr Eslake said that stringent lending standards requiring borrowers to prove they could meet payments at 3 per cent above their current rate meant it was unlikely many homeowners would be forced to sell.

"History suggests that Australians will go to considerable lengths to avoid defaulting on their mortgages or losing their homes .. cutting other discretionary spending, and in extreme cases 'essentials', before doing that [selling]," he added.

Canstar finance commentator Steve Mickenbeck advised mortgage holders on a variable rate to make the most of the current low rate and build a financial buffer against future rises.

"Whatever the timing of rate increases, the time for building buffers is now while interest rates are still low," he said.

"Borrowers with capacity have the opportunity to bring forward the impact of the interest rate increase by lifting their repayments ... Redraw or offset facilities give borrowers the ability to access these extra funds should they hit unexpected harder times, which can act as a buffer to deal with uncertainty," he added.

Bad news for new borrowers

Buyers trying to get a foot on the property ladder within the next two years would also suffer as a result of rising rates, according to Canstar, with new borrowers suffering a hit to their borrowing power.

If rates did rise to by 1.65 per cent, a couple with a household income of $90,000 per annum could suffer a $92,000 cut to their borrowing power, based on what they would qualify for at a 3.04 per cent and 4.69 per cent interest rate.

"When the Reserve Bank moves the cash rate up you can be sure the banks will move home loan rates up too, meaning higher loan repayments. For borrowers entering the property market or trading up, this also means the capacity of incomes becomes stretched meaning they are forced to borrow less," Mr Mickenbecker said.

Launceston property a 'hot commodity'

The prospect of rising rates comes as property prices in the Launceston area continue to surge.

The median dwelling price, which includes houses and units, in the city increased by 33.8 per cent in the 12 months to January 2022 to sit at a median price of $543,760, according to CoreLogic.

The changes were even more pronounced in suburbs like East Launceston, up 37.5 per cent, and Norwood, up 36.6 per cent.

Launceston Harcourts director and property consultant Jeremy Wilkinson said the city had become a hot commodity for people seeking a lifestyle change, relative escape from the pandemic or as a way to get a foot onto the first rung of the property ladder.

But there were signs the city's market would return to a more stable rate of growth in 2022.

"The prices we've seen in the past year and into 2022 have been pretty insane, but from what we can see and are feeling in the market is that it has cooled off ever so slightly," Mr Wilkinson said.

"We are still seeing people pay premium prices, but it might take a bit longer to see, maybe a week, instead of a few days," he said.

Mr Wilkinson said Launceston was considered an attractive option for first-home buyers and those who had moved from the eastern states, including Sydney and Melbourne, along with those in Tasmania's capital, Hobart.

"What we are finding is that people from Melbourne, Sydney and Hobart and pushing into Launceston because they are able to afford something more luxurious for the prices they'd pay for a small one-bedroom apartment in their home city," he said.