All Topics / Help Needed! / NAB up interest rates another 0.9%!!!

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    Up up up she goes!!!!! lol man there is gunna be some major carnage out there-might not see the full effect for 3-5 years when peoples fixed terms are up but boy oh boy are we in for a ride. The interest rates are guna keep going up, the market is guna get flooded with properties (even though there is a 'shortage' lol) and prices are gunna come down. Steady as she goes boys and girls-as Steve has said in his emails, cash is kings, no need to rush in and buy cos things are only gunna get worse. Sit back, enjoy a red wine and feast on the carnage that will ensue :)

    Now the question is whether I should email that punk a$$ 23 year old who beratted me for suggesting that he may be getting in over his head by getting a 500k mortgage and that property prices wont continue to increase at 30% per annum? These are the people who will be selling soon folks!! Know it alls who will soon find they know nuzzing, nuzzing lol

    Profile photo of Scott No MatesScott No Mates
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    your letting facts get in way of a good story Scott :-)

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    I read somewhere it was actually 9% if that makes it a better scoop.

    Richard Taylor | Australia's leading private lender

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    Qlds007 wrote:
    I read somewhere it was actually 9% if that makes it a better scoop.

    Yawn…gee how surprising….

    I heard 0.9% on the radio so sue me if the announcer made a mistake-wouldnt be the first time. That asside it doesnt change the fact that we are in for one hell of a ride over the next few years-even with interest rates as low as they are mortgagee auctions are at their highest level in 7 years, clearance rates well down and we are only at the start of the down trend. Big booms are followed by big busts. To ignore the warnign signs is to be ignorant-you keep living your pie in the sky dreams gents, what do they say….ignorance is bliss???

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    yarpos wrote:

    your letting facts get in way of a good story Scott :-)

    Ohh sorry did you think the whole basis of the property down turn was due to the rate rise by the NAB? I was pointing out yet another rate rise-and there will be plenty more dont you worry sunshine. Tell me this gents-how do you think the large proportion of pie in the sky dreamers who have gone out and got massive mortages in the niave belief their property will continue to sky rocket will be able to pay off the interest when their fixed terms end in 3-5 years? By that time inflation will already have a firm grip-Australia is a drop in the ocean of world economics-credit squeze will get worse, been there done that….

    Profile photo of Tony BTony B
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    Blogs
    Its all good news for me. Im off to  an Aution tomorrow I feel it will be handed in Do you think I should save my petrol and stay at home? Im not a valture but Ive worked hard and saved & Im not living in a 5 bedroom home, plasmer TV in every room & a 4 weel drive in the drivway,  that I cant afford. As Ive said in the past when the shit hits the fan it sticks to the walls. Intrest rates up, petrol up, food up we dont get a wage rise evey time rates go up so the money is coming from the borrows pocket. Cash is King   Well some people just dont get it. ?????  I made a cash offer unconditional, 30 day. 10 % deposit with in 24 hours, subject to nothing. Of course I offered them 6 k less than their other phantom offer. They said no.  Ive been staking out open houses over the last month and some that Im intrested in dont even get a single person in to have a look.  So people are saying that a 0.9% or .9% only $15.00 per month wont make a diffrence, Im not sure on that, its not much in dollar term per month is it (the price of a pack of cigarettes).  But the reallity is in the average family buget. Just do the numbers of a single family income, actully do it, and you can see $1000 clear per week is no enough to live on and pay the morgage. Check out the local caravan park see how many families are living there and working, some Ive met are renting there house out because they cant afford to live in it or sell it.  Stormy weather ahead indeed my friend.  The future, well we can only guess, but.  Intrest rates must go up to hold back inflation, so there is no cheap money around. The only thing that will drive home sales is Imagration, the supply and demand.  A shortage of houses is what you hear. Its not so, there is a shortage of affordable houseing.  More rental accommodation needed. Yes, but tell me why would I spend 300k or more to build a rental for someone to pay me $280 in rent per week and no real capital gain, if I sell it with in 5 years I would loose money. I can get the same retune on my money in the bank 8.2%, do the sums and think about it.  It is only my opinion but, owning a home is a costly thing there are many expences involved other than the morgage. Young people that have gone in and been given 100% and been told its better to own your own home and that you can never loose on real estate are having their eyes opened for them. Too much money has been lent to those who cant afford it. The home ownership DREAM  has been used as a marketing tool and for most it turning into a nightmare.    

      Steve has said in his emails, cash is kings, no need to rush in and buy cos things are only gunna get worse. Sit back, enjoy a red wine and feast on the carnage that will ensue :)

    I dont want to capitalise on others misfortune but, it would be a diffrent story it the intrest rates had gone down and house prices up. As a cash buyer low intrest rate have not been a friend.  I hope you are right Blogs and steady as she goes, down ,down & down some more. Great post mate.

    Cheers to all.

    Tony………………..

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    blogs wrote:
    yarpos wrote:

    your letting facts get in way of a good story Scott :-)

    Ohh sorry did you think the whole basis of the property down turn was due to the rate rise by the NAB? I was pointing out yet another rate rise-and there will be plenty more dont you worry sunshine. Tell me this gents-how do you think the large proportion of pie in the sky dreamers who have gone out and got massive mortages in the niave belief their property will continue to sky rocket will be able to pay off the interest when their fixed terms end in 3-5 years? By that time inflation will already have a firm grip-Australia is a drop in the ocean of world economics-credit squeze will get worse, been there done that….

    errrr…no, did I say that?   interesting interpretation…you have a scenario you beleive in and you pick the symptoms that fulfill your expectations…..I think the trend is there also , maybe just not with an outcome as apocalyptic as you present…..i trust there is room for more than one point of view. 

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    TonyB,

    I think the biggest, most pressing factor in the property downturn will be MARKET SENTIMENT. Much like the stock market people are but sheep-and as soon as they get a wiff that they may not be going to see gains over the next 5 years like they have over the past 5 I believe they will be compelled to sell to maximise their profits rather than risk coming of a fixed term in 3 years at high interest rates, high inflation and to find there house is now worth LESS than what they paid for it during the boom.

    I believe this sentiment will quickly gather momentum-resulting in an influx of properties on the market, a coresponding decrease in clearnace rates and of course a reduction in property prices. So all in all if you can find a bargain by all means pounce on it, but in my humble opinion I definately wouldnt be in any sort of a rush.

    As for captilising on others misfortune…well I see this as a business. Im sure the people who sold for record profits dont feel bad, and Im sure the greedy people who bought the biggest and best and pushed the price so rediculously high didnt feel bad either, so no I also wont feel bad. To me it is just like the stock market-if the price falls capitalise. :)

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    yarpos wrote:
    errrr…no, did I say that?   interesting interpretation…you have a scenario you beleive in and you pick the symptoms that fulfill your expectations…..I think the trend is there also , maybe just not with an outcome as apocalyptic as you present…..i trust there is room for more than one point of view. 

    Mate you had a dig I was making up a story…

    Of course there is room for more than one opinion, I just find it amusing that a PROPERTY INVESTING forum where people are supposed to view these matters rationally and in a business like manner still seem to have their pie in the sky Im gunna be an instant millionaire blinkers on.

    As for apolictic-suppose it depends on your interpretation. Average house value would proabaly be around $400, maybe $500k? All we need is a piddly 5% drop in prices and people have automatically wiped out $24k of their wealth, throw into the mix the majority of home loans have been finance with 10% deposits all of a sudden you have stack of people instantly worth nothing!!

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    blogs wrote:
    yarpos wrote:
    errrr…no, did I say that?   interesting interpretation…you have a scenario you beleive in and you pick the symptoms that fulfill your expectations…..I think the trend is there also , maybe just not with an outcome as apocalyptic as you present…..i trust there is room for more than one point of view. 

    Mate you had a dig I was making up a story…

    Of course there is room for more than one opinion, I just find it amusing that a PROPERTY INVESTING forum where people are supposed to view these matters rationally and in a business like manner still seem to have their pie in the sky Im gunna be an instant millionaire blinkers on.

    As for apolictic-suppose it depends on your interpretation. Average house value would proabaly be around $400, maybe $500k? All we need is a piddly 5% drop in prices and people have automatically wiped out $24k of their wealth, throw into the mix the majority of home loans have been finance with 10% deposits all of a sudden you have stack of people instantly worth nothing!!

    nah, not really making things up , just latching onto a factoid with great fervour because it fits the template :-)

    as you say its a forum, no barriers to entry and no IQ test ,  so you will get a % of dills, dreamers and tyre kickers……but, from what I see at least ,  there are some great contributors here and a good number of newbies with reasonable questions to ask. I know I have learnt a lot.

    Agree with your last para ,  but just like shares the profits and losses arent there until you sell  (generally speaking…I dont want to start a margin lending thread).  If you cant tough it out, then it gets ugly as you say

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    yarpos wrote:
    nah, not really making things up , just latching onto a factoid with great fervour because it fits the template :-)

    as you say its a forum, no barriers to entry and no IQ test ,  so you will get a % of dills, dreamers and tyre kickers……but, from what I see at least ,  there are some great contributors here and a good number of newbies with reasonable questions to ask. I know I have learnt a lot.

    Agree with your last para ,  but just like shares the profits and losses arent there until you sell  (generally speaking…I dont want to start a margin lending thread).  If you cant tough it out, then it gets ugly as you say

    Agree entirely mate-its a great forum, though as Ive said before I do find it concerning that the looming state of the global economy very rarely ever rates a mention. The economy is the under pininning foundation of investing, yet here it is all to frequently ignored in the spate of 'how do I buy my next property' questions. I see it as a massive opportunity-something that should excite every poster here!!

    As for holding out the troughs-agree entirely. Unfortunately this boom has gone hand in hand with never before seen levels of debt. It IMHO wont take all that much to tip people over the edge. Many will be forced to sell by the banks (already happening), many will be forced to sell because they cant afford the repayments, and many will be forced to sell out of fear and market sentiment. Either way I see a big influx of properties hitting the market, and unless we have a massive influx of wealthy imigrants there will be no one to buy them (at top dollar). Has happened before will happen again, though this time with much greater effect…

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    Hang on is there a cycle happening? Returns are crap generally and people cannot afford to buy so they need to rent.  Rents will need to increase to cover a return of investors to supply more housing for rental.  In the past 2 years rents have started trending upwards sharply and will continute to do so with vacancies in many states below 1% now.  Probably another 2 years though before they reach close to decent returns in many areas.  Then we have another reinvestment cycle of srious investors jumping in then the sheep then the rapid increase in property prices again and it all starts again.

    Affordable rentals is something the government needs to look at and sort out because at the end of the day it all comes down to making a dollar and people are not going to be generous and lose money so people can have affordable rent.  Property is already starting to plateau and the outer lying suburbs are all starting to down turn as wages have not kept up with the increase in prices and it looks like it will take a few more years for that to happen again. 

    Australians need to wake up as the Australian Dream has definitely bolted if you want to live close to the city that is.  Europe is a classic example of where now people rent generally their whole lives or it takes a couple generations to pay off the family home.  Australia probably also needs to look at longer rental terms as it will give renters stability, landlords permanent tennants and less costs for changing tennents frequently etc etc.  Similar to commercial where the tennant and landlord lock in the rent and the increases upfront so everyone knows what they are in for.  Not a $50 per week hike very 6 months cause that what the house down the road is now let for.

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    rgarreffa wrote:
    Hang on is there a cycle happening? Returns are crap generally and people cannot afford to buy so they need to rent.  Rents will need to increase to cover a return of investors to supply more housing for rental.  In the past 2 years rents have started trending upwards sharply and will continute to do so with vacancies in many states below 1% now.  Probably another 2 years though before they reach close to decent returns in many areas.  Then we have another reinvestment cycle of srious investors jumping in then the sheep then the rapid increase in property prices again and it all starts again.

    Yes its all that simple lol. If there is such a massive housing and rental shortage why do have to wait 2 years for decent returns? Why arnt they already there?? Of course in 2 years time interest rates could quite easily be well over 10% so your rental rates are really gunna have to sky rocket to get a 'decent return'. As for the reinvestment cycle-well yes maybe by the smart punters like you and I, but there will be a massive amount of people who wont be able to afford to finance a loan-who  knows, deposits may go back to 20% requirement?? I suppose what Im trying to say is it all comes down to cash flow, and when a economy is in recession and there is a credit squeze cash flow becomes VERY tight and people tend to hang onto every cent rather than risk loosing what little they have. Notice how in a booming economy people start believing (rather irrationally) that it will never end, that it will just keep going up. Well in a recession people also start to believe (again irrationally) that the economy will never improve. People are but stupid animals…

    rgarreffa wrote:
    Affordable rentals is something the government needs to look at and sort out because at the end of the day it all comes down to making a dollar and people are not going to be generous and lose money so people can have affordable rent.  Property is already starting to plateau and the outer lying suburbs are all starting to down turn as wages have not kept up with the increase in prices and it looks like it will take a few more years for that to happen again. 

    No, why should the government have to subsidise peoples stupidity? People are greedy pigs-its a joke that certain self interested sectors would want you to believe there is a lack of affordable housing. Geez have a look at Realestate.com-you can pick up a nice 3 bedroom house in Bacchus Marsh which is less than an hour out of the city for under $200k!!!! If people want to be choosy about where they live and HAVE to live within walking distance of the city then they can dam well pay for it. As for wages not keeping pace with increases in prices-EXACTLY!! So whats going to happen when interest rates go up even more and the country goes into recession? Companies sure as heck wont be able to afford even more pay rises….property will HAVE to drop.

    rgarreffa wrote:
    Australians need to wake up as the Australian Dream has definitely bolted if you want to live close to the city that is.  Europe is a classic example of where now people rent generally their whole lives or it takes a couple generations to pay off the family home.  Australia probably also needs to look at longer rental terms as it will give renters stability, landlords permanent tennants and less costs for changing tennents frequently etc etc.  Similar to commercial where the tennant and landlord lock in the rent and the increases upfront so everyone knows what they are in for.  Not a $50 per week hike very 6 months cause that what the house down the road is now let for. 

    No offense mate but you really need to get this notion out of your head that we are ANYTHING like europe, cos we just AINT. Nearly every single major European city is hundreds if not thousands of years old, in which nearly every single piece of vacant land has been built on, which is further followed up by dense populations in the millions. Then compare it to Australia, a country that is only 230 odd years old, sparcely populated, a entire population similar to that just of New York City and oodles of vacant land for development. Its a joke and a big con, and goes even further to proove what a disater our property market is when our affordability is amongst the worst in the world!!!

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    Well Boys should I buy now or wait.
     All posts have been great stuff. Im a cash buyer ( yes the harder I worked the lucker I became) and Im getting cold feet as I see the market at best softening. The delema for me is if I put my cash into a nice place am I going to see my assett decrease in value?   New as to existing. If I build now I feel I will not loose as much as the cost of building matterials will have to go up at least with inflation. So the cost of building the same place will have to be more next year, as opposed to buying existing witch will not have new applances with warrenties & need some work. However, what sets the price of housing thats on the market, in part isnt it the cost of building the same place new hence " you cound not build it for that price" .  If so what about the morgagee sales what will drive their price?  I have yet to see a morgagee sale thats been really cheap in fact I saw one go for more than you could have built it.  What are the best opptions for a cash buyer in this market? I can see more morgage stress to come it just has to happen.  This can lead to fire sales, but at what damage to the lender and owner. I used one of the morgagee calculators online and If a couple borrowing 300,000 k @ 8.25% over 25 years, monthly repayment will be $598 per week, a situation thats not possable on a single wage or even 2 average wages. I can only smell smoke in these cases.   So, will I get a bargan with a magaree sale?  Should I wait till there are more on the market?  Will the govenment jump in and set something up to keep people in there homes as they seem to cop it for each intrest rate rise (we know they dont control the reserve) but Joe average blame the current govenment for there own poor financial management. I am concered as to fringe suburbs dropping in value, I would have thourght they would go up as people cant afford inner, why is this.  Global econmomic factor and globalization. It seems that the world wealth is now starting to balance out (look at China) we have had it too good in Aust. for a long time. In some countries average people can never own ther own home, never. Land & homes are handed down, you are born rich or you stay poor, simple no way out. I see Aust. changing also.  So are we  I best to get in now and just see what happens.  Any opinions on the above would be appreciated.
    Thanks

    Tony……..

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    You guys should be fortune tellers!!

    So basically for saying normal people with families and who enjoy life outside money are 'F$#%ED'

    Grow up and may god give you a soul.

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    tony,  with all that rattling around in your head maybe you should just keep your cash in a nice 7-8% account until you get your thoughts together (I guess thats what you are doing by posting here).  You can always think of lots of scenarios that justify doing nothing,  these days you at least can get a nice return doing this.   You havent said if you are buying your PPOR or investing or if you are thinking short or long term.   Seeing you asked , if I was in your $ position I would build/buy quality , inner city (<10k out) for now,  hold and not panic if there is a dip….sounds like you are well placed to ride out the bumps.  Relatively speaking I think inner locations will be stronger just due to basic scarcity/desirability. I am not a great beleiver in the generalisation of outer burbs being that shaky (or much shakier than anywhere else), I think it depends on city and location ie. Sydney vs the rest….overstreched McMansion land vs established outer burbs….a lot of these sorts of comments come out of Sydney's west and get extrapolated to everywhere.  As we know Sydney is the centre of the universe so if its a problem there then it must be everywhere musnt it?  . Sorry if I'm cynical but I got out of Sin City half a life time ago and its probably the single best move I ever made financially and quality of life wise. 

    virgin investor

    Can you target your rant a little more specifically?  Dont know about others but I have trouble relating "So basically for saying normal people with families and who enjoy life outside money are 'F$#%ED' "  to whats being discussed.   Do you mean the prospect of not everyone being able to expect to own a home?  or possible increasing rents?  or what?   If people are enjoying life outside of money how can they be F$#%ED by these property / money related issues???

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    virgininvestor wrote:

    You guys should be fortune tellers!!

    So basically for saying normal people with families and who enjoy life outside money are 'F$#%ED'

    Grow up and may god give you a soul.

    lol wow what a sensible, value adding post this one is!!!

    Geez dunno why Im even bothering responding to this joker but….

    O.k virgin, Im guessing by your user name to chose to impart your valuable gem of info based on the fact you are yet to buy a investment property? A few easy to read posts for your pea brain to foloow:

    a) Talking about the financial state of the economy and where it may be headed is sensible-its only ignorant, uneducated people who fail to read, learn and listen that get burnt. You seem to be in this class-dont want to hear about the other potential side of the coin? Ignorance is bliss

    b) This is a INVESTMENT forum, not a warm hugs and co coa forum. Investing is business, and looking at potential deals brought about by changing financial situations is part and parcel of maximising wealth.

    c) I, nor I doubt anyone would wish financial ruin on anyone. However, if they are/were silly enough to to keep informed, buy with disregard for a change in the economy, put THEMSELVES into mortgage stress, then why should I or anyone feel sorry for them? Nobody is FORCED to take out a mortage that is to big for their payroll, nobody is FORCED to spend all their disposable cash, nobody is FORCED to live a life based on credit.

    d) Grow up? lol I think its the kiddies who dont want to face a looming reality are the ones who need to grow up :)

    e) "normal people with families and who enjoy life outside money are 'F$#%ED' " No, just the greedy ones who had to have the biggest and bestest they could possibly afford without allowing for any increased costs of livings and or mortage :)

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    virgininvestor wrote:

    You guys should be fortune tellers!!

    So basically for saying normal people with families and who enjoy life outside money are 'F$#%ED'

    Grow up and may god give you a soul.

    Mate not alot of  insight or useful information in the above. 
    It is an Investment forum and no body has said anything about  "normal"  people with families being 'F$#%ED' . So I dont know why you would write that. 

    Anyway enjoy your weekend.

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    Forumites may be interested in watching 4 Corners on the ABC this Monday night at 8.30pm. The program is about increasing mortgagee sales.

    Concur with Blogs and others here – too many single income/two+ kid families buying McMansions as their first home and shopping too freely at Harvey Norman = difficult times ahead.

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