The media are covering his apology in great detail yet they cherry picked his words 18 months ago. You think we will get an apology from Channel 9 for not emphasizing the caveats in his interest rate announcements from back then?
yep. would’ve nipped the inflation level. Such drastic rate rises are going to have a negative impact. Next year will be telling. Just in the ascendancy of this rough cycle.He should be apologising for not increasing rates sooner.
i would take a 1990 15% rate on a 60-80K home in a Melbourne outer beachside suburb any day of the week. Don't forget that from the 15% rate in 1990, it fell to ~6% pretty quickly then stayed stable around 4-6% for the better part of 15 yearsmany haven't lived through the 15%+ era in the 90s
haha, Wife parents bought a 3 bedder 1940s home on a 900sqm block in Aspendale 20 meters from the beach in 1988 for 43k at 17ish %. Current land value +2M. House if fucked though, needs to be bulldozed, they didn't look after it.How far outer Melbourne did you have to go to get a beach side home in 1990? Nelson perhaps......
Yes and no, most people could afford the loans, otherwise they wouldn’t have been able to get them. Banks asses a stressed rate, meaning they account for rate rises of around 2-2.5% over the current market rate. That in all fairness in a normal environment accounts for about 8-10 rate rises.and allowed people to dip into their super, which a lot of people used for deposits for loans they couldn't afford in the first place.
What do you mean by loan sharks?Now the problem is how many people BS to loan sharks or loan sharks fudged the figures for them to have further access to credit, it's quite common in the investment circles.
I hope I don’t have to eat my words in a years time, but this is unlikely to happen except to the people who got caught right at the top of the market, and then only even in some areas only. Most people made gains of 20-40% in the 6-12 months before the rates started rising. The drops in price have been incremental in most areas and still haven’t eaten into half the gains made in that period yet.What will happen when the value of the purchases fall beyond the loan amount,
Depends. A lot can happen in a few years. We could drive the economy so far into the ground that they have to stimulate again by cutting rates. People could be on better incomes by then, many people already have the capacity to absorb the difference. Many wont, but I don’t think its going to be the blood bath people are predicting. There's always been doom and gloom predicted and its always been a bit of a non event.or they can no longer service the loan? The crunch will come when many come off the fixed rate in a few years and are faced with higher rates.
Here we are now into the future and most residential house prices are still dropping fast and a lot more interest rate rises to come ahead. I've seen all the wankers on residential home investment sites trying to go to lower grade lenders through brokers because banks won't touch them anymore, it says a lot for itself alone. Whether home prices start to flatten out in the near future is anyone's guess but as for climbing prices I very doubt it with many having reduced loan capacities and this is coming out of the mouth of many of the loan brokers around. For many that bought after covid, most of the gains you talk about are almost all gone if you factor CG and buying costs.Yes and no, most people could afford the loans, otherwise they wouldn’t have been able to get them. Banks asses a stressed rate, meaning they account for rate rises of around 2-2.5% over the current market rate. That in all fairness in a normal environment accounts for about 8-10 rate rises.
The super use was a loophole people exploited to increase their deposits, or access a deposit they didn't have access to before, to make use of the exceptionally cheap lending environment. It was pretty genius, until the ATO cottoned on and started asking people to explain themselves and subsequently penalized them.
Most of these people still came out on top getting a greater return on their super funds in the great property pump of 2021 thann if the funds had sat in super taking the hits that covid was causing, even with teh ATO penalties.
Banks would have assessed them as any other person getting a loan at the time, so if they couldn’t afford it, it wasn’t due to accessing super to do it, it was due to the crazy increases that occurred outside of the banks and customer expectations. There would be a few of those, but I think by far, even if you had to sell, as long as you didn’t hang on like an emotionally invested muppet, you’d still have likely come out on top (sadly most people don't know when to let go).
What do you mean by loan sharks?
Fudging numbers on finance applications is a national pastime with more than a third of people admitting to doing it, not just in investment circles. Though doing it doesn’t equate to not being able to afford a loan. Some lenders have erroneous credit criteria that unfairly and unreasonably shade certain income, inflate certain expenses and just plain doesn’t make sense (ie even if you can prove via years of financial records you spend less than the benchmarked living expenses, many lenders will still use the benchmark when assessing your servicing capacity). Fudging to get around these I whole heartedly encourage if you can get away with it.
I hope I don’t have to eat my words in a years time, but this is unlikely to happen except to the people who got caught right at the top of the market, and then only even in some areas only. Most people made gains of 20-40% in the 6-12 months before the rates started rising. The drops in price have been incremental in most areas and still haven’t eaten into half the gains made in that period yet.
Value falling below what they paid is only a problem if they have to exit. Otherwise, they just hold. They were obviously happy to pay what they paid for it and the short term shouldn’t be a factor if its worth 50k less or not. They have a roof over their head and presumably they can aford to keep it.
Depends. A lot can happen in a few years. We could drive the economy so far into the ground that they have to stimulate again by cutting rates. People could be on better incomes by then, many people already have the capacity to absorb the difference. Many wont, but I don’t think its going to be the blood bath people are predicting. There's always been doom and gloom predicted and its always been a bit of a non event.
If you own a house today and you think you will be in the shit in a few years time, start working out how to avoid having to sell it, because its quite possible you might not be able to get back in.
I don’t know what the upper limit of an average home price will be, but with the way different housing solutions are being devised and planned (social, duplexes with shared facilities etc) I don’t think the overall average price of a free standing home is going to tank and cause the market to implode.
Also maybe nerfonomics can explain why the shimano parts shortage still persists?
after a pump of 20-40% in 6-12 months, what did you think would happen? "dropping fast" is debatable though. data below.Here we are now into the future and most residential house prices are still dropping fast and a lot more interest rate rises to come ahead.
It certainly doesn't in the slightest. Banks have some of the craziest and erroneous credit criteria in the name of risk management that they don't know a good risk when it works their shaft an tickles their balls. Banks also don't rate for risk, which means that their published rates are their rates and requires a very specific criteria to fall into the category that those rates were designed around. So if it doesn't fit into their extremely narrowly defined box, its out, even if its low risk.I've seen all the wankers on residential home investment sites trying to go to lower grade lenders through brokers because banks won't touch them anymore, it says a lot for itself alone.
not really. You only pay tax on CG if its an investment. If youre selling an investment that youve held for greater than 12 months, your CG tax is half. Again, take a look at the data above.For many that bought after covid, most of the gains you talk about are almost all gone if you factor CG and buying costs.
Its not in the credit lenders interest to see their customers fail. Most people that get fucked over have done it to themselves. Either by not being financially literate enough to understand their own finances and coming across a shady broker just looking to make a commission, or because they've lied through their teeth to get money they cant afford while hoping their circumstances change before the music stops. Whiel there have been cases of banks doing the wrong thing as evidenced throughout the royal commission, they aren't in the business of fucking people over. if they were, no one would make money.I hate seeing people fucked over by credit lenders
Couldn't agree more. Laying off the smashed avo is a good start loland I believe now is the time to adjust your finances if you're on the edge, go see a professional for advice.
This is why we have inflationMy mortgage is pretty darn high but I still got cash to splash
This is why we have inflation
sTOp It!