The people this will impact on most are those that already have mortgages.
I have no sympathy to waste on people who took out mortgages, without taking into account that as the economy improves interest rates will rise. Rates are still historically low. Those whining about the banks should have done their homework before taking out the loans, on minimal deposits.
They have no idea how well off they really are, and how well they could be sewing the seeds of future financial prosperity if they could go down a few extra rungs on the ladder and made a sacrifice or two.
The interest rate rises/falls are supposed to be based on the basket of goodies that determines inflation. Not the bleeding rises in property prices. This increase, on the basis of trying to reign in housing price increases, is just another example of a regulatory body loosing sight of it's charter and stepping into areas it should keep the fark out off.
The people this will impact on most are those that already have mortgages. This will reduce the amount of money circulating within the economy (at a time the economy needs stimulus), will impact on new building projects and will have a negative impact on the economy going forward (where the inflation rate does not warrant it).
At this point I begin to wonder if the Reserve Bank feels it has an obligation to take over where John Howard left off.
The government also contributed to first home buyers being in this situation with the increase in the grant. It has essentially been Australia's version of the US's subprime market.I have no sympathy to waste on people who took out mortgages, without taking into account that as the economy improves interest rates will rise. Rates are still historically low. Those whining about the banks should have done their homework before taking out the loans, on minimal deposits.
The Reserve Bank has in fact been 'fixing' the inflation caused by the government's various stimulus packages.I always think that all these rate movements are a case of knee jerk reactions. If the rate falls below 2% or above 4% then the Government, who's job it is to run the country, have basically 'cocked it up'.
Australia needs quite rapid growth, imho, of between 6% and 8% for many years to come. After all, 'Rudd & Co' want rapid population growth and more people inland, 'not all dotted along the coast'. Rudd & Co want people working not surfing.
I don't mean to be asking intrusive questions, but if you have lived so frugally thus far and always clear your credit card debt, how is it that you have 'large amounts of debt"?I think I fit into the category of "sacrafice" having never lived in a property which I own. Often sharing a run down appartment or house with friends (even at times living in my car at the beach - despite having more than one property). I have never paid more that $150/week in rent, have never had a car loan, and clear all my credit card debt each month - plus sometimes working 2 jobs. But I wittness many friends and family members doing the same as your daughter buying/building houses they cant really afford because the alternative is 'below' them.
Unfortunatly though I still have large amounts of debt. The interest rate rises affect my lifestyle and (as long as they dont jump too high) I will continue to survive.
Maybe rather than fitting into the "stupid or desperate" category I sit in the "greedy investor" category.
Everybody has to start somewhere and unfortunatly not many start with a lump sum, so often debt is the only option...
The Reserve Bank has in fact been 'fixing' the inflation caused by the government's various stimulus packages.
I can't help wondering what would have happened if the RB or the government had done nothing and the whole situation was simply left to market forces. At least we would not have had first an artificially stimulated economy and then (via the RB) a need to put the brakes on the results of that stimulation. All just seems a bit silly, really.
But perhaps I just don't get it.
People are either desperate or stupid and I`d go with the former, as the idealism that one has to have a mansion or a snappy appartment to fit in with the norm.
I may be old fashioned, but even in my daughters case who is building a new home,it is ridiculously oversize, with a bathroom as large as my bedroom
I feel for those that are in her position and I hope when at todays new cash rate of 4% they never have to revisit the 15-17% of the Keating days. They have no idea how well off they really are, and how well they could be sewing the seeds of future financial prosperity if they could go down a few extra rungs on the ladder and made a sacrifice or two.
Even another 2% rate rise will pummell most young couples especially one with kiddies with both parents working.
Your problem will come when you decide to re-enter the property market and you find property value have outpaced the short term gain you made from selling at the peak and renting.
I don't mean to be asking intrusive questions, but if you have lived so frugally thus far and always clear your credit card debt, how is it that you have 'large amounts of debt"?
I think he is talking about investment debt
I don't believe in having interest only loans forever, you should always have the bulk of your debt in a reducing cycle.
I am probably over leveraged atm, and will be for the next 12months until this project is completed. Once it is finished I will have the option to either increase income (rent) or reduce debt (property sale). My decision will depend on conditions at the time.Never rely on the kindness of banks, dont over leverage and if you do, make sure it is sort term to take advantage of a lull in the market and have a plan to steadily reduce the leverage i the following years.
I am implimenting a 10 year plan (I am 3 years in) and if everything goes to plan I will be in a possition to retire at age 35.
My point was that they haven't gone up with the last RB rise!Yes.
When? :dunno:
How much? :dunno:
I'm really happy with rates going up though. Fantastic news for savers.
My point was that they haven't gone up with the last RB rise!
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