Rental property investors to be hardest hit by rate hikes – RBA
RBA Impact (BRISBANE)
Reserve Bank governor IAN MACFARLANE says people who have
invested in rental properties are likely to be the hardest hit by
recent interest rate rises.
Mr MACFARLANE says 1.3 million people have invested in rental
properties in Australia.
He says that’s where the big rapid growth has occurred — and he
suspects it’ll be people in that group who’ll be the most
over-extended.
Mr MACFARLANE says even moderate interest rate rises and falls
in certain sorts of property prices, will cause investors distress.
He’s told a parliamentary committee hearing that investors using
deposit bonds to purchase property — particularly those intending
to onsell prior to settlement — are in for a lot of grief.
AAP RTV jmt/rp08-12-03 1252
richmond
i would like to add and who will be the least affected?
those who have bought lower priced Cash positive properties, as this site encourages[
]regards westan
I agree about the deposit bonds but the people that use them to secure an IP and then onsell would be classified as property traders not investors.
I don’t think that investors will be the hardest hit as we can always write the loss off against our tax.
I think the hardest hit will be the young couple with a couple of kids that have saved and saved to buy their dream house and have over committed with the repayments.
Chris
Hi,
Thanks for the post Richmond [
]I never quite got into deposit bonds as I say it as a way of achieving 100% financing which was a little too risky for my investing profile.
My read of the RBA statement is simple enough: Those relying on capital appreciation and in for a rough trot.
The raise in interest will effect profitability of investments that do not have a fixed rate. It’s a good idea for all investors to calculate at what interest rate +ve cashflow turns into cashflow neutral and take appopriate action before this occurs.
If rates get back up to around 8.5% then I think things will get a lot, lot worse. FMI see the article I wrote this back in 2002 available at:
https://www.propertyinvesting.com/article11_03Don’t panic folks, but the time is now to reassess your financial position moving forward.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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