Earlier today the RBA announced that it was going to increase its cash benchmark rate by 25 basis points.
You can watch a short video of Steve McKnight's thoughts on this matter at:
https://www.propertyinvesting.com/weekly-update/06-04-2010
Furthermore, let's get a discussion going on the following topics:
a) Has the RBA acted prematurely, or is this a good decision?
b) What impact do you think the increase in rates will have on homeowners and investors?
c) What's your prediction on what the cash benchmark rate will be at the end of this year (currently 4.25%)
– Admin
This is the worst reserve bank board we have had. This is the same board who nearly wrecked the economy in 2007. Now after announcing a gradual increasing of rates we have had 5 increases out of 6 meetings. Gee that is gradual.
So who will this effect.
Lets look at all the people who as first home buyers got the grant and in many cases who were mortgaged to the hilt. My predication is that this year in outer areas we will see loans default at in excess of 20%.
If rates are raised to 8% we will see a correction and a dramatic slowing in the economy.
This is a dumb decision
Nigel Kibel | Property Know How
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This is the worst reserve bank board we have had. This is the same board who nearly wrecked the economy in 2007. Now after announcing a gradual increasing of rates we have had 5 increases out of 6 meetings. Gee that is gradual.
So who will this effect.
Lets look at all the people who as first home buyers got the grant and in many cases who were mortgaged to the hilt. My predication is that this year in outer areas we will see loans default at in excess of 20%.
If rates are raised to 8% we will see a correction and a dramatic slowing in the economy.
This is a dumb decision
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
I think it needs to increase another 0.5% to bring it inline with the historical rates.
Bring it on Mr. Stevens…. 0.25% is too small
No impact at all.. in fact the auction clearance rate is hitting 70%+ in Sydney and Melbourne
I think it needs to increase another 0.5% to bring it inline with the historical rates.
Bring it on Mr. Stevens…. 0.25% is too small
No impact at all.. in fact the auction clearance rate is hitting 70%+ in Sydney and Melbourne
Bet the fixed interest rates of old are starting to look really attractive now. 3-year fix at 6.39% anyone? That was mere months ago. As families are forced to cut back their spending and put it instead into their mortgage, certainly retail sales will suffer. I too, believe that 8% would be the tipping point. Cross that by a margin and nasty things will start to happen.
Investors would be well-poised in this current environment. Competition with FHB would be much decreased. But again I feel that raising interest rates in this manner merely hurts the average working Australian. On the other hand it should reward those looking to retire on the interest on their bank savings.
Good luck, all FHB and other one-home owners!
Bet the fixed interest rates of old are starting to look really attractive now. 3-year fix at 6.39% anyone? That was mere months ago. As families are forced to cut back their spending and put it instead into their mortgage, certainly retail sales will suffer. I too, believe that 8% would be the tipping point. Cross that by a margin and nasty things will start to happen.
Investors would be well-poised in this current environment. Competition with FHB would be much decreased. But again I feel that raising interest rates in this manner merely hurts the average working Australian. On the other hand it should reward those looking to retire on the interest on their bank savings.
Good luck, all FHB and other one-home owners!
The reserve bank in its infinite wisdom have made this mistake in the past and end up chasing there own tail to keep things under control but alas each and every time fail. I just love the way the powers that be try to track and keep economies growing at a pace they think is correct.
The issue on hand now is that in one hand they gave first home buyers incentive to purchase and now there are more than 40% of those struggling to maintain mortgages with interest rate hikes since then.
This will mean in a short time from now that we may see a flood of low end properties dumped on the market as foreclosures start to occur.Rental prices are set to inflate as investors try to correct any losses on property owned and cover overheads.
I wish you all the best with any property acquisitions that you have made and as always things are set to change.
The reserve bank in its infinite wisdom have made this mistake in the past and end up chasing there own tail to keep things under control but alas each and every time fail. I just love the way the powers that be try to track and keep economies growing at a pace they think is correct.
The issue on hand now is that in one hand they gave first home buyers incentive to purchase and now there are more than 40% of those struggling to maintain mortgages with interest rate hikes since then.
This will mean in a short time from now that we may see a flood of low end properties dumped on the market as foreclosures start to occur.Rental prices are set to inflate as investors try to correct any losses on property owned and cover overheads.
I wish you all the best with any property acquisitions that you have made and as always things are set to change.
The true catalyst for the interest rate rises is the performance of the aussie dollar. As the dollar strengthens, imports are so much cheaper and we tend to splurge. With interest rates jacking up higher again this is only keeping pace with our perceived worth overseas and the interest rate trend will continue as the global financial crisis continues.
Americas economy is in the loo and will stay there, and as Australias currency is traded against a weakening greenback the inevitable rate rises will continue. Im shedding a few properties now as I feel that getting down to 6 or 7 will do me for now. Reducing a further $300k in debt and taking the 100K cash into an offset account against my personal mortgage is a great move. Consolidating loans on three other properties as well means I am trimming off the fat and getting the portfolio leaner for further rate rises ahead.
They have predicted 2 more rises this year. How are we all going to fare under these conditions??
Keep smiling, it's only a game.
DD
The true catalyst for the interest rate rises is the performance of the aussie dollar. As the dollar strengthens, imports are so much cheaper and we tend to splurge. With interest rates jacking up higher again this is only keeping pace with our perceived worth overseas and the interest rate trend will continue as the global financial crisis continues.
Americas economy is in the loo and will stay there, and as Australias currency is traded against a weakening greenback the inevitable rate rises will continue. Im shedding a few properties now as I feel that getting down to 6 or 7 will do me for now. Reducing a further $300k in debt and taking the 100K cash into an offset account against my personal mortgage is a great move. Consolidating loans on three other properties as well means I am trimming off the fat and getting the portfolio leaner for further rate rises ahead.
They have predicted 2 more rises this year. How are we all going to fare under these conditions??
Keep smiling, it's only a game.
DD
I sincerely hope all property investors out there pass the costs on to renters. If interest rate rises are meant to curb spending, then placing that burden upon mortgage holders alone is bloody incompetent imo. How about raising the GST? Would be political suicide for sure, but would probably be much more effective spending deterrent.
I know at least NSW is faced with ever increasing energy costs and this combined with increased interest rates is got to have some kind of major impact.
For the life of me, I cannot see how so many people can go down the local shopping market every weekend to places such as Harvey Norman and the like, and spend like there is no tomorrow (probably a lot of it is personal debt accumulation granted). If people weren't spending there would be much less economic activity and less pressure on interest rates.
Have a look at the following article that appeared in The Daily Telegraph. I would like to know peoples' opinions on this….
There has to be a bubble burst again somewhere down the track. Wasn't it the RBA that failed to forecast the effects of the GFC and keep rising interest rates, to only respond with almost childish panic to bring them back down again to record lows? Probably too low in the first place. All seems to be over-reacting by both the RBA and Government to the economic vicissitudes the way I see it.
I sincerely hope all property investors out there pass the costs on to renters. If interest rate rises are meant to curb spending, then placing that burden upon mortgage holders alone is bloody incompetent imo. How about raising the GST? Would be political suicide for sure, but would probably be much more effective spending deterrent.
I know at least NSW is faced with ever increasing energy costs and this combined with increased interest rates is got to have some kind of major impact.
For the life of me, I cannot see how so many people can go down the local shopping market every weekend to places such as Harvey Norman and the like, and spend like there is no tomorrow (probably a lot of it is personal debt accumulation granted). If people weren't spending there would be much less economic activity and less pressure on interest rates.
Have a look at the following article that appeared in The Daily Telegraph. I would like to know peoples' opinions on this….
There has to be a bubble burst again somewhere down the track. Wasn't it the RBA that failed to forecast the effects of the GFC and keep rising interest rates, to only respond with almost childish panic to bring them back down again to record lows? Probably too low in the first place. All seems to be over-reacting by both the RBA and Government to the economic vicissitudes the way I see it.
I can't understand how first home buyers are able to afford loans of $700K+ as seen on a weekly basis, usually at auction. Will these people then cry poor and say woe is me, can I have another FHOG? There was no such thing when I bought my first property. There is a lot of moaning and groaning from people saying they will never be able to buy a home. maybe they need to lower their expectations for their first home and not expect to be able to afford what mum and dad have after two or more years. Start small people, get a foot in the door, reno or extend the property, or move up gradually, you don't need to have all the bells and whistles with the first home you buy.
If people prioritise their spending and don't ever extend themselves in the first place, then they should be able to meet these extra repayments without too much stress. If they are stretched then they need to get creative. Rent out a room or garage space to increase cashflow in the short or long term. So many couples buy a four bedroom home, use one of those bedrooms to produce income.
Sonya
I can't understand how first home buyers are able to afford loans of $700K+ as seen on a weekly basis, usually at auction. Will these people then cry poor and say woe is me, can I have another FHOG? There was no such thing when I bought my first property. There is a lot of moaning and groaning from people saying they will never be able to buy a home. maybe they need to lower their expectations for their first home and not expect to be able to afford what mum and dad have after two or more years. Start small people, get a foot in the door, reno or extend the property, or move up gradually, you don't need to have all the bells and whistles with the first home you buy.
If people prioritise their spending and don't ever extend themselves in the first place, then they should be able to meet these extra repayments without too much stress. If they are stretched then they need to get creative. Rent out a room or garage space to increase cashflow in the short or long term. So many couples buy a four bedroom home, use one of those bedrooms to produce income.
Sonya
Sonya… try to rent a house in inner west sydney…
you need to compete with 15 applicants…rental market is crazyyyyyyyyyyy
Sonya… try to rent a house in inner west sydney…
you need to compete with 15 applicants…rental market is crazyyyyyyyyyyy
Apologies for my previous post it should have read 'twenty of more years' and 'over extend' rather than 'ever extend'
GOM
Again, it comes down to choice. Why do people 'have to' live in inner west Sydney? People can, to a certain extent choose where they live. this would be helped even more if the governments and big business put a bit more thought and effort into decentralising some businesses. With technology today, emails, video teleconferencing etc. you do not have to have businesses set up in the middle of the city to be profitable and/or successful.
Moving to outer suburbs or even rural areas would also be cheaper as far as rent or purchase costs for commercial property is concerned. Travel time for staff would be shorter, therefore they may be more productive, have a better quality of life and be able to afford the type of home that they want.
I know that the rental and property market has gone crazy, but it is fuelled to a large extent by people who 'want it all' now.
Apologies for my previous post it should have read 'twenty of more years' and 'over extend' rather than 'ever extend'
GOM
Again, it comes down to choice. Why do people 'have to' live in inner west Sydney? People can, to a certain extent choose where they live. this would be helped even more if the governments and big business put a bit more thought and effort into decentralising some businesses. With technology today, emails, video teleconferencing etc. you do not have to have businesses set up in the middle of the city to be profitable and/or successful.
Moving to outer suburbs or even rural areas would also be cheaper as far as rent or purchase costs for commercial property is concerned. Travel time for staff would be shorter, therefore they may be more productive, have a better quality of life and be able to afford the type of home that they want.
I know that the rental and property market has gone crazy, but it is fuelled to a large extent by people who 'want it all' now.
Sonya, you can't get a descent house if < 750k.. unless you want to live in the flat
The problem is $$$ = jobs Sydney CBDTry CityRail and Sydney Bus… tell me what you think about the transport system in Sydney.
It is the slowest railway system in the WORLD.Driving.. yes… try to get into sydney CBD 7-8am with toll charges and parking fee…KILLER
and petrol is going crazy..
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