RBA Rises Rates for The 9th Time in a Row

Trying2SaveABuck on 07/02/2023 - 15:04
Last edited 07/02/2023 - 15:54

The RBA have announced its 9th consecutive rate rise in a row
https://www.news.com.au/finance/economy/interest-rates/rba-i…

Interest rates a ~4x higher then they were pre-pandemic in December 2019 the cash rate was 0.75% it now is 3.35%

We have about 1/3 of home loans coming of 'fix terms' this year meaning the 'actual' affect of the rate rises have not be felt but a lot of borrowers

now before the Karens post
a. in 1990 interest rates we 21%
or
b. you should of seen this coming

no one cares you paid 21% on your $30,000 home loan

literally no one and i mean no one could have seen this level of interest rate hiking happen in such a short period of time this is history making speed rates are rising - keep in mind the high inflation is also hurting borrows so it is a double hit

of course we need to combat inflation but im posting to see how this will affect people who are 'borrowers' like myself - i know a few people that are 'really' feeling the pinch and wanted to say there is support out there via financial stress hotline and you can contact your lender for support regarding your situation if you are finding yourself in trouble

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    Interest Rates have me worried
  • 357
    Interest Rates dont have me worried
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    I dont have a loan
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Comments

      • ttt888 on 08/02/2023 - 17:12
        +1

        The rate rise will benefit future.
        If as country y we can only survived on 1.5-2% rba rate we are truly screwed.

  • Kaz0551 on 07/02/2023 - 18:14
    +5

    RBA increases rates, Govt gives cost of living benefits, People keep spending, RBA increases….

    • hazzad on 08/02/2023 - 12:40
      +2

      Share with me where these cost of living benefits are from the Gov? Id like some thanks..lol. Keep hearing lots of talky talky, but not seeing anything that benefits most people.

      • IMadeYouReadThis on 08/02/2023 - 21:08
        +1

        Share with me where these cost of living benefits are from the Gov?

        $500 voucher from NSW to parents for After/Before school care, $150 back to school from NSW for uniform/shoes etc.

        Did I use them? Yes!

        Did I need them? Nope!

        As the elections loom, there is talk about giving $250 to each family for electricity subsidy and there may be something from the Commonwealth re this too.

        • Kaz0551 on 10/02/2023 - 21:57

          And
          $100 creative kids
          $100 active kids
          $100 first lap

          That's $1000 right there, per child

  • prinsenhof on 07/02/2023 - 18:23
    +6

    I love adding to the 33 billion the banks are forecasted to make this year.

    I think that giving the banks so much money is sure to decrease inflation soon.

    Next election, II hope that the banks are on the ballot. I would like to vote them in so they can officially run the country.

  • tsunamisurfer on 07/02/2023 - 18:48
    +1

    I love adding to the 33 billion the banks are forecasted to make this year.

    If you are an Australian worker, you will likely profit from this if you check your Super statement.

    • Trying2SaveABuck on 07/02/2023 - 20:42
      +3

      not really…have you seen the performance of the big banks …even with dividends you would be losing money to breaking even once taking annual inflation into account over the last 10 years

      bar maybe CBA

      • Daniel Plainview on 08/02/2023 - 13:01
        +5

        For those amongst us who wish to know the facts, rather than simply making sweeping statements I submit the following - which are the compounded returns for the past ten (10) years inclusive of dividends on a p.a basis (so what they've returned on average over that 10yr span):

        NAB: 6.95%
        ANZ: 5.59%
        WBC: 5.19%
        CBA: 9.90%

        The inflation over this same period as been under 2% p.a.
        https://www.macrotrends.net/countries/AUS/australia/inflatio…

        So @Trying2SaveABuck your assertion of 'losing money to breaking even' is completely untrue.

        EDIT: Source for the banking returns was the excellent Sharesight historical performance tool. :-)

        • Trying2SaveABuck on 08/02/2023 - 13:44
          -1

          So @Trying2SaveABuck your assertion of 'losing money to breaking even' is completely untrue.

          Average ASX market return last 10 years was around 8-9% you have under preformed the market

          You have picked the 'top' of the market right now financials have been hot so the same numbers run the same numbers 2-3mo ago before we had a big rise and the market was mid range see how you go?

          I did say 'Bar CBA'

          10 year capital return performance for
          NAB 10%
          WBC -22%
          ANZ -9.94%
          source NAB trade
          take away 2 percent inflation (almost 8 percent last year) and add dividend you are roughly breaking even? if not losing money (bar Tax considerations with Franking credits which might be beneficial to some investors)

          keep in mind financials as a sector has 'rallied' really hard and the ASX in general is pretty 'expensive' right now with the ASX 200 near all time highs

          additionally keeping money just in a high interest savings account in the same period probably would of averaged you a 3% that is 'no risk' (government insured upto 250k per account) or like i said above you could of just VAS and had a 'better' outcome

          the only bank i would probably say is worth investing in long term is MQG which is less bank and more investment company

          • Daniel Plainview on 08/02/2023 - 13:56

            @Trying2SaveABuck: I've been respectful but it's rather frustrating when people say one thing - and then when pointed out their error they adjust their definition.

            have you seen the performance of the big banks …even with dividends you would be losing money to breaking even once taking annual inflation into account over the last 10 years

            Thats what you said - verbatim. And it's 100% wrong - plain and simple. That is my point and no amount of other points by you will change that. CBA was given as they're known as the big 4 for a reason and it seemed appropriate - as you did say they would be the exception - which was incorrect as all were very much profitable if held.

            I've no idea why you're pulling in average market returns as vaguely related to this - it certainly wasn't in your original point?

            This is the top of the market? Umm disagree, and your point is made now - so what time should I use? These are silly things to say. Jesus you want the same numbers from 2-3mths ago….you're being rather 'Trumpian' in your insistance that things be adjusted so what you say is correct.

            My advice is just own what you say….if you get it wrong, say - ah fair point - but here's what I was actually trying to convey. I know I wouldn't take your advice on real estate matters but based on what you've said above I certainly wouldn't be looking for insight onto equities either.

            • Trying2SaveABuck on 08/02/2023 - 14:02
              -5

              @Daniel Plainview:

              I've been respectful but it's rather frustrating when people say one thing - and then when pointed out their error they adjust their definition

              is anything i said above incorrect? BAR cba Non of the banks have been a 'good' investment when you consider there performance - they have not beat the market

              BOQ - is also down -17% over 10 years
              BEN is 0.3% over 10 years

              their dividends have more or less then around 5-6% pa is that not close to 'breaking' even or losing money once again compared to the market i dont understand why one would invest in any of our banks bar MQG

              • Daniel Plainview on 08/02/2023 - 14:21
                +1

                @Trying2SaveABuck:

                is anything i said above incorrect?

                Ummmm yeah - my original point stands - I've no idea what the rest of this extra stuff you've added has to do with anything.

                You said…and again I'll quote you:

                not really…have you seen the performance of the big banks …even with dividends you would be losing money to breaking even once taking annual inflation into account over the last 10 years
                bar maybe CBA

                This is - as pointed out, completely false. That after this is point out you're deflecting completely talking about average share market returns, when the returns were calculated, sector rallies etc - cool, I don't understand your points on these at all as again you're significantly flawed in your assertion…….. but it doesn't change that statement being incorrect. THAT was and the point I was making. :-)

                Again maybe I'm old school, but when I get things wrong - and I do A LOT it's easier to say,Oops, you're right - and adjust what i was saying if needed than insist I was right - but thats just me.

              • MrMarket on 08/02/2023 - 15:05
                +2

                @Trying2SaveABuck: I am with @Nikko on this one, he point out your err in your initial statement then you change and change

                big banks are only the top 4 and MQG which is also considered big but more on investment banking than consumer banking.

                BOQ and BEN are not big banks they are region banks

                • Trying2SaveABuck on 08/02/2023 - 15:22
                  +9

                  @MrMarket: fair enough i admit probably over-stepping - I concede i was wrong

                  • MrMarket on 08/02/2023 - 15:29
                    +3

                    @Trying2SaveABuck: Nice, good on you not many willing to concede on the internet forum and would carry on and on. I like to keep it civil and add my 2 cents but don't get into flame war.
                    Thumb up from me

        • Debt Free on 08/02/2023 - 16:20

          CBA rewards it’s loyal customers of more than 60 years by now making them line up out the store and 500 metres out, with their swollen feet, walkers, for hours at a time—- that is their reward for investing their Savings in 1 year Locked in Term Deposits paying less than 2%. But they don’t complain- just in case it may affect their now rich fat kids who are too busy to ever ask them about their day now.

        • payless69 on 08/02/2023 - 20:10

          On the share market one can do this in a week!

  • Some Human on 07/02/2023 - 20:27
    +1

    I just don't like how there's less extra money to throw on the house because the interest is eating it.

  • jamo96 on 07/02/2023 - 21:11
    +8

    The rate is still well below the avg rate over the past 30 years. I dont see why all of a sudden a good chunk of the population seems to think that 1% is the norm.

    • Odin on 08/02/2023 - 11:02
      +5

      Because it is the new norm
      .

      The old long term average is simply no longer relevant

      • us3rnam3tak3n on 09/02/2023 - 01:44

        It may not be very relevant to a short term loan but I wouldn't base decisions about a 20+ year mortgage on the events of the past ten years alone.

      • OhNoUShiz on 10/02/2023 - 03:27

        Living with covid is new norm but living with 1% is not considered norm, lol.

    • hazzad on 08/02/2023 - 12:43

      To be fair, higher interest rates in a healthy economic environment probably would have as many people worried. If cost of living wasn't through the roof and economically things weren't tarting to fall over, i probably wouldn't be so concerned. its because these things are happening that's got me worried for the short to mid term.

  • Debt Free on 07/02/2023 - 21:20
    +2

    At least the old pensioner with all his savings in a High Interest Term Deposit Savings Account at his local no longer local Commonwealth will now earn a few dollars more. He will spend it at the overpriced Woolworths subsidising everyone else’s Rewards buying their homebrand basics which went up this week by 25% to 50%. That is if his legs can handle the queue stretching from the road outside to the teller which is a one hour wait because as usual there is only one teller out of the 3 available open. He could not afford to buy a house because interest rates were 21% and no one would give him a loan. He is lucky- his rent is only $400 a week now.

  • DarkOz on 07/02/2023 - 21:52
    +4

    Should have gone hard with 0.75%/0.50% inceases instead of 0.50%/0.25%. Inflation is far from under control and it's still peaking at 7.8% after these 9 increases.

    I am furtunate enough to be from a double income average earning family so inflation doesn't really bother us but I do really feel for the less well off and poor people who are struggling with rent and putting food on the table everyday.

    • Trying2SaveABuck on 07/02/2023 - 22:18
      +1

      Should have gone hard with 0.75%/0.50% inceases instead of 0.50%/0.25%. Inflation is far from under control and it's still peaking at 7.8% after these 9 increases.

      the 'truth' is economist are split some thing inflation as peaked, some say we need to go harder

      the RBA is scare that the 1/3rd of fix loans that will come off at some point in the next 12mo will be leading 1000s of Australians off a financial cliff.

      there is 'too many unknowns' no one has ever upped the cash rate this fast in our history, we also have never had this much household debt in our history - we could be pushing the economy into economic Armageddon

      • DarkOz on 07/02/2023 - 22:38
        +5

        the RBA is scare that the 1/3rd of fix loans that will come off at some point in the next 12mo will be leading 1000s of Australians off a financial cliff.

        In trying to save 1000s of Australians from a financial cliff it ended up pushing 100,000s of low income families onto struggle street with no end in sight.

        there is 'too many unknowns' no one has ever upped the cash rate this fast in our history, we also have never had this much household debt in our history - we could be pushing the economy into economic Armageddon

        All these problems was created by the government controlled property ponzi scheme and it doesn't look like it will stop anytime soon.

      • Debt Free on 07/02/2023 - 22:57

        Tryingtosaveabuck - do you mean you were the only one who expected basically free money at ridiculously rock bottom interest rates to pay for your house?
        The fixed loans have had their bargain rock bottom interest rates long enough to have been able to profiteer well from this and buy a house because of it, and plenty of time to save the extra money because of those cheap loans too.
        Rates should have been put up by much more last year, toooooo slow by the inept Reserve Bank who are a laughing stock and now must make up for lost time.

  • daft009 on 07/02/2023 - 22:25
    +2

    Go AUD!

    About the only positive thing from these rate rises

    • payless69 on 08/02/2023 - 20:11
      -1

      So far it has gone nowhere!

      • daft009 on 08/02/2023 - 21:05

        Against the euro it has. Which is what I need :)

        • liongalahad on 12/02/2023 - 01:58
          +1

          has what? It's been floating around .65 EUR for years now and it's still there

          • daft009 on 12/02/2023 - 09:15
            +1

            @liongalahad: Been 62/63 mostly. I buy every week or 2 so I keep a good eye on it

      • Frozensage on 12/02/2023 - 22:00

        haven't noticed it when buying imports from China or America, pretty much been the same as last year. Only thing that's a positive is the shipping cost coming down but then I'm paying more interest in my business loans. So either way it's the same crap and I feel poorer. But I guess that's what RBA want right, everyone to feel poorer so they spend less, or was it they want inflation to stop so value of money doesn't get devalued, thus feel poorer.

  • Debt Free on 07/02/2023 - 23:08
    +3

    Inflation is affecting the low income by 25% to 50% in their everyday lives. Maybe restaurant meals, and Uber and MenuLog meals have not gone up yet but all basic cheapest of the cheap groceries have gone up by 25% to 50%. Meanwhile our petroleum industry reports highest profits in whole history. And meanwhile Woolworths Rewards the rich with points the poor have to pay for via their overinflated homebrand prices.

    • hazzad on 08/02/2023 - 12:52
      +1

      Ive def seen price increases via online ordering apps. Most meals have gone up by at least 10% with restaurants i occasionally used. The only thing that kept me using those services was their % off deals. Now those barely cover the "ordering tax" that most of these service impose(or the restaurant applies to make up for using the service). Dont bother anymore. Cheaper to cook at home..lol.

      • Debt Free on 08/02/2023 - 15:49

        not as cheap cos all basics have gone up faster than the pre prepared foods the more affluent are still buying. Join your local library- so many good cook books, or buy the Lebanese flat breads available in Rye, Wholemeal and plain White- 5 in a $1 pack still at those cheap large fruit and veg shops- fill your freezer full of them. Take one sheet out of freezer and put on large plate and cover one half with any pizza type ingredients you have- zap for 1 min in microwave, after put lettuce in middle if you have any—- super easy and super fast hunger buster.

    • Frozensage on 12/02/2023 - 22:01
      +1

      but the low income will have government support, it's only the middle income that will get squeezed.

      • Debt Free on 12/02/2023 - 23:31

        it’s the Low Income with No Government support I worry about- the ones that earn just above rock bottom, or ones who may have savings, or pride or whatever that renders them ineligible for any government assistance. They are not really middle income, just scraping in above Low Income.

  • 82norm on 08/02/2023 - 08:42

    As long as savings rates go up, bring on the increases…long overdue.

  • Daniel Plainview on 08/02/2023 - 09:03
    +2

    Curious - the OP has stated that people who borrowed funds during earlier periods of significantly higher interest rates have no validity commenting on these current matters - as the sums borrowed were much lower….?

    On a very simplistic level this might seem correct - i.e rates are much lower now, but the outstanding loan balance much higher, therefore the effect of the rate change higher.

    However, this discounts entirely that the average Australian's income is also now much higher than in the 1990's etc - thus it's atleast to a degree, all relative.

    Does anyone have stats/info on the average income vs average household mortgage in terms of now vs historically high rate periods? As the ratio of this would be quite instructive and meaningful.

    • Sleeqb7 on 08/02/2023 - 12:59
      +2

      Last info I saw was;
      At the time of 17+% rates, average house price was 4x gross income. Now it's closer to 10x.

    • Grunntt on 08/02/2023 - 13:09
      +1

      Does anyone have stats/info on the average income vs average household mortgage in terms of now vs historically high rate periods? As the ratio of this would be quite instructive and meaningful.

      Not exactly what you asked for but it makes some interesting points.

      https://www.abc.net.au/news/2023-02-06/baby-boomers-generati…

  • Sinnerator on 08/02/2023 - 09:04
    +3

    Every intelligent person begs to differ.
    ~0% Fed interest rates was a nightmare lurking.
    What did you expect when people earning $80K a year can take out $1mil loans.
    Did you learn absolutely zero from GFC ?

    • hasher22 on 08/02/2023 - 18:19
      +1

      No one learns from past history and data.

  • hazzad on 08/02/2023 - 09:38
    +6

    Am i the only one that thinks that the current rate of high inflation is more about supply chain issues, labour shortages, higher fuel costs, natural disaster(floods taking out crops) and the thinking that manufacturers and suppliers can simply jack up prices because its almost accepted now? Most of these have little to nothing to do with people having money in their pockets.

    Supply chain issues will come and go and have always been an issue. Cost of shipping has dropped dramatically from covid highs. The price hikes due to fuel cost increases really should have been a one and done. Fuel costs haven't really increased since their peak early to mid last year and from what i can see have stabilized. The constant increase in grocery prices has me stumped to be honest. Given that only 1/3 of people hold mortgages, how does the constant rising of interest rates rain in the remaining 2/3 of the population? I would have though it has a negative impact as many of those may have money in accounts earning more on higher interest rates so they in theory have more money to spend.

    I get inflation needs to be rained in, but im not convinced this current tact is going to have the effect that they think it will.

    Im no means a economics guy, just my take on things.

    • Daniel Plainview on 08/02/2023 - 10:48
      +1

      You make valid and good points (IMHO) - I like that you mentioned that in an inflationary environment many retailers & suppliers can simply raise prices to increase their profit margins as it's perceived to be normal & little if any justification is required.

      I think unfortunately Govts in simple terms only have fiscal and monetary policy to influence the economy, specifically in the short term. Both have their pro's and con's. Monetary policy in particular is regarded as a 'blunt' tool that affects the entire economy & areas not needed to be adjusted - but traditionally it's used to control inflationary pressures across economies.

      Is it the right tool to use now? Hard to say - they'd certainly have better info & people on it. Its unfortunate many will suffer but real estate, even ones home is primarily an investment - to characterise it otherwise is misleading a balanced discussion.

      I suspect as with many things in life the RBA looked at this as a damned if they do and damned if they don't situation and they have very few tools they can use - hence it's far from perfect but it's the only viable option to them at this time & market conditions.

      • Omarko on 12/02/2023 - 06:41

        have you ever worked with Woolworths or Coles and try to put a price increase through ? Its incredibly complex process and you have to provide full justification to get prices increased, its thoroughly vetted and checked and if there is no justification then you wont get the price increase. So no, suppliers dont raise prices just to make up the margins. Cost increases are real … and ABIG issue.

    • Alley Cat on 12/02/2023 - 15:08

      Yes, it's accurate.

      I stock some incense sticks (mostly for my own use but hate to pay retail so I resell them), and one day I noticed The Reject Shop selling the same item at the same price of $2. About four months ago, I went to pick up some random stuff from the same Reject Shop, the price of the incense has gone up to $2.50. Yesterday I thought I should restock some and checked my supplier. The price has either not moved or gone up by 10 cents or so. That 25% increase in the Reject Shop came from nowhere, because I can imagine them having gigantic bargaining power in bulk purchasing and probably some sort of fixed-term contracts.

      'But everyone else is putting up their prices!'

  • Daniel Plainview on 08/02/2023 - 10:09
    +2

    Ok found an example on housing affordability - it's far from perfect but I do think it's somwhat instructive in the area:
    https://www.finder.com.au/owning-a-home-in-the-80s-vs-today

    Unsurprisingly - it confirms that housing prices growth have outpaced wage growth considerably - making in a general sense, housing less affordable - in other news grass is green. ;-)

    It was done in MAR22, so states current rates as 2% - which is clearly below what many folks will be paying - BUT it also states the 1980's example rates as 11.5%, when they peaked in 1990 at 17%. So given BOTH now and then folks ended up on much higher ratesI think this is something of a 'wash' - thus making it still valid (IMHO).

    When you factor in the average home cost vs average household income vs applicable interest rates for each period there's FAR LESS of a difference between then and now than many would have you believe.

    As the monthly mortgage repayment for the 80's example was 2.2% of household income and the 'current' one 2.5%. So I'd say that with all due respect, the folks from back then do kinda have a point - and discarding their feedback as irrelevant is convenient but flawed.

    I think the lost aspect here is that current households have a LOT of spending that just wasn't a factor back in the 80's and 90's - I feel a lot of it is discretionary('wants' rather than 'needs') but its a real factor for many homes. :-)

    • Trying2SaveABuck on 08/02/2023 - 11:34

      This 'article' was published in March 2022 the cash rate 0.1%

      The cashrate now is 3.35% which based on the shear increase using those same numbers…

      thus the debt levels have 'stayed high' but the variable component

      ……………………..so essentially this study is a bit pointless - no one was really moaning when loans we 2% interest even with large debt

      To get your head around it the cash rate is 33.5x more then it was at the time of the article being written…. thus if you apply that to the 2.5% you mentioned the spending on household income would be around 65-70% (to me that sounds a bit high but it would probably be a lot higher then 2.5%)

      • Daniel Plainview on 08/02/2023 - 12:08

        You've simply stated exactly what I said. And I stated that rates are higher now - but if the example had used 1990 as the year instead of 1984 - the rates then would be 6%+ higher as well - hence i stated a wash, which if anything is clearly doing the current time a favour.

        Saying the rate is '33.5x more now' is correct but perhaps a tad 'melodramatic' - given the starting point of an alltime low of 0.1%?

        I disagree the study is pointless - as it shows the relationship between average monthly mortgage repayments vs the interest rates of the time vs average household income of the time.

        You've completely botched/misunderstood the '2.5%' reference - as the 2.1% & 2.5% were the percentages of average ANNUAL household income that was being paid on the average monthly mortgage repayments in 1984 & 2022 respectively. I've no idea at all how you've somehow felt 33.5x this indicates anything - other than a random figure. Perhaps recheck or read again. :-)

        • Trying2SaveABuck on 08/02/2023 - 12:54

          It is a pointless study perhaps look at the average 'wage' increase from 1984 to 1990

          compare with the average wage increase from say 2015 to 2022

          it is impossible to 'compare' the two eras

          University is no longer free most people already are sitting on 40-50k of Hec debt before they start their first full time job

          taxes are higher now and way more numerous, not to mention the addition of the GST which we all pay

          i could go on but the fact is the current and next generation will have it harder

          i do acknowledge the older boomers had it hard in the sense 'work' was harder - there was none of this WFH, work life balance, 4 weeks paid annual leave etc this was all fought for by the older generation to make conditions better. Which i think us millennials take for-granted

          (on a personal note) I credit boomers and older generations becuz they demand the government help workers not just the bottom 5% or minority populations - now days it seems like the younger generation are taking for-granted the life they have, we seem to have forgotten socialism is bad when it is only given to a select few. I personally think the standard of living will continue to decline regardless of who is in power but esp under this government due to a sheer lack of focus on working Australians

          • Daniel Plainview on 08/02/2023 - 13:15
            +2

            @Trying2SaveABuck: 'Pointless' - translation, the results don't align with my preferred narrative.

            With all due respect - you've made other assertions in this thread that are just wrong, factually and irrefutably wrong but stated to suit your purposes and mislead a balanced conversation. I've even linked and provided sources and would do so for others if I didn't have a load to do.

            The problem is when people don't read all thats stated and just pull parts of it out & ignore others, when it's ALL RELATED - as I freely admitted in my very first sentence that the article given was 'far from perfect but somewhat instructive'. And I stand by that comment 100%. I think you've got some significant personal biases that might lead you to feel it's pointless but thats my personal conjecture.

            Its funny in big complex, 'I blame him, you blame them' - issues - I always try to dumb it down to it's simplest parts. And in this instance it would be this. Every single person who currently has a mortgage took it out willingly and through their own free will.

            They didn't have to do this - they chose to do so. They chose how much to borrow, they chose the loan variation they wanted, they chose how much to spend, they chose where to buy etc.

            Whats the commonality in all this? They had final say on literally everything. So how it suddenly becomes an 'others' situation now, is completely and utterly beyond myself and any fathomable logic. :-)

            • Trying2SaveABuck on 08/02/2023 - 13:32

              @Daniel Plainview:

              I think you've got some significant personal biases that might lead you to feel it's pointless but thats my personal conjecture.

              everyone has personal bias - that is why it is 'called personal bias' LMAO

              but fair enough, I understand your point

              • Daniel Plainview on 08/02/2023 - 13:46

                @Trying2SaveABuck: Well I do some of yours - others sorry you've kind of lost me on. :-).

                All that said, I give you credit as hidden away in your OP was salient & good advice which is for people who are or suspect they will have financial issues stemming from loan servicing to get out in front of it by speaking to financial advisory services &/or their lender.

                This is a complex issue - there's lot of factors at play. Alas i think that even after the GFC folks are still only too happy to be biting off more than they can chew - and essentially insisting on living beyond their financial means.

                Much has been made of the generational statistical contrast on 1980/90's mortgages vs now - however I think the contrast in mindset when it comes to financial 'wants' vs 'needs' is far more instructive on this & closer to the root of the what is a very complex issue that is not able to be easily solved.

                But credit to you on giving good advice that folks get out in front of this NOW - as it's going to get worse in a number of ways & will be likely a several years situation. Will suck for many but pretending it doesn't exist will only make expotentially worse down the line.

                • Trying2SaveABuck on 08/02/2023 - 13:49
                  +1

                  @Daniel Plainview:

                  Will suck for many but pretending it doesn't exist will only make expotentially worse down the line.

                  I agree

                  'short-term' mind set of voters and governments will ultimately be our down fall you can only 'kick the can' down the road for so long

                  • Daniel Plainview on 08/02/2023 - 14:28
                    +2

                    @Trying2SaveABuck:

                    'short-term' mind set of voters and governments will ultimately be our down fall you can only 'kick the can' down the road for so long

                    Now I agree with you 100% on this.

                    In a democracy, popular policies tend to get elected, not unpopular ones - and so unless you win - those unpopular policies are just 'theories', no better than those of a drunk at a bar.

                    With governments much as they say with ageing, "we all end up with the face we deserve'. So if we're too selfish and short term in our thinking - it's these type of FUBAR situations that we unfortunately all end up reaping.

                    FWIW my personal commendation to you for agreeing to disagree without silly downvoting of each other - which alas things often turn to around here. It's nice to cross swords with someone who doesn't abuse the misunderstood voting system here.

                    Again good advice by you on folks getting help NOW before it's needed. Hope they listen to you - as like with a fire you don't wait until its on you to get ready - and I say this as an ex-firie.

                    Unfortunately as with all good meals, eventually the bill comes - our issue is as you say, we want to keep on kicking the can down the road - which is terrible for an individual lendee, our government and all of Australia. Go figure.

        • Mr Haj on 09/02/2023 - 18:40

          People always refer to the repayments but how about the fact that you could save for a deposit in about two years back then and now it will take about a decade. on top of this your savings would have been compounding at a ridiculous rate, while we've been getting next to nothing for years.
          I'm not sure what loans existed in 1990 but I am sure they were shorter term (10 or 15 years?) and I am assuming that a 40 or 50% deposit was probably the norm.

    • irony on 10/02/2023 - 17:19
      +1

      Hmmm, housing prices in Australia about average for an OECD countries when expressed as a function of wages.
      Lower than in the UK, Spain, Potugal, USA, Canada, Germany, Poland, Austria, New Zealand etc.

      But that doesn't help the narrative that people like to hear.
      "Life is hard, I can't afford a house because I am being screwed by the man."

      https://data.oecd.org/price/housing-prices.htm
      (select Price to Income ratio)

  • tessel on 08/02/2023 - 15:58

    Moar please moar….

  • mavis30551 on 08/02/2023 - 16:05
    +1

    interest rates are railing me but like my brethren ill grit my teeth and bear it.
    Looking at better paying jobs to keep up with the demand.
    Already have a second job, get drunk before I go out so I don't have to spend money on drinks and buy cheap meat and live off it most of the week.
    Luxury items have pretty much stop being purchased and I dont really buy myself things anymore unless i really need to. My fridge broke and I cant replace it and my phone died and that was a pain to replace. Saying that still living the dream.

    Its been wild.

    • Debt Free on 08/02/2023 - 16:48
      +1

      At least you got a house Mavis. Rents are going up now too. Don’t worry you will get through this just like my friends did paying 18% on 500K loans and hands shaking every month they opened their mortgage statement. They skipped meals and went without and lost best years of their life to scrimping and saving and looking haggard and while now they still have nightmares about it- they can afford to look after themselves for once - and wow they look Good!

  • Drakesy on 08/02/2023 - 16:14
    +2

    There were multiple posts prior to the first rate hike on here that called for interest rates to rise earlier and the "no rate hike prior to 2024" could be picked apart almost immediately as soon as you looked across the ocean at New Zealand.

    Yes, those who were ignorant didn't see it coming but the writing was on the wall for a long time.
    Can't print money and not expect some recourse.

  • trapper on 08/02/2023 - 16:24
    +2

    It's still far lower than inflation, going to keep going up for sure.

    • duchy on 09/02/2023 - 17:31

      There's not a direct correlation.

  • bigbadboogieman on 08/02/2023 - 16:34
    +4

    I started off at 1.99% will likely go to 5.05% after the hike from 2 days ago (my fixed rate expired last year). I am quite stressed as I have taken a hit of roughly $1200 per month without any wage growth and our company is laying people off so not sure what's going to happen.

    • Debt Free on 08/02/2023 - 16:56
      +1

      Refinance now before your Company threatens you more. I hope someone here can recommend a good bank you can refinance too and take advantage of the 3 to 5 K bonus to refinance.
      Good luck.

      • duchy on 09/02/2023 - 17:33
        +1

        St. George has had a 5k bonus recently. Worth checking out.

  • bigbadboogieman on 08/02/2023 - 16:40
    +6

    I feel bad for people who bought at the (highly inflated) peak of the market with 5% deposit (carrot funded by the government). Those were the people who were severely let down by the govt.

    They are now trapped (in potentially huge amount of debt) with high interest rates. They have no ability to refinance (because they can't fulfil the criteria anymore) or sell up (making a loss thereby losing the deposit they worked decades for or even worse).

    • Daniel Plainview on 08/02/2023 - 17:01
      -1

      In the short term it's a poor position to be in - but as with any investment, as thats what it is above all else - one needs to expect losses - on paper or actual in the short term.

      That said, I'm unsure what you mean when you say 'severely let down by the govt'….in which way do you feel they were failed?

      Do you feel their current financial predicament is largely due to their actions or those of other parties/persons?

      • trapper on 08/02/2023 - 17:15
        +2

        In the short term it's a poor position to be in …

        It's not just a 'poor position', a lot of recent buyers are going to lose their house and end up with nothing.

        • Daniel Plainview on 09/02/2023 - 10:46

          Thats what I'd define as a poor position to be in. A tragedy is like in Turkiye or Ukraine, where it's through no fault of the owner they've lost their property.

          The bitter but unfortunate reality for many here is that defaulting on their loan will be overwhelmingly due to their own actions i.e if they'd borrowed less and purchased a lesser property, they would not have defaulted.

          • trapper on 09/02/2023 - 11:33
            +3

            @Daniel Plainview: They did what everyone else did for the last 20 years.

            They were just the unlucky ones left holding the bag.

            • Daniel Plainview on 09/02/2023 - 11:51

              @trapper: Disagree - as has been pointed out countless times the market has dramatically changed in the last 20yrs.

              So as with any area, the individual must change with the times to get the best results. if you want to use the justification that this was how it was done several decades ago - so it'll be fine now thats incredibly risky and it clearly was.

              Consumers now have access to so much more choice, info at the tip of their fingers - you used to have to bust your arse to find out such stuff. But people just wanted it all - and there was with many, no convincing them otherwise.

              Small sample size so neither here nor there but I had experience with this about 18mths ago with a low income friend who wanted to leverage her home into a $600k loan to buy another property. She was incredibly ignorant to financial matters but got as far as having an offer accepted before I managed to find out and talk her into cancelling everything.

              I am 99% certain she'd be up the creek now if she'd taken that - but she was resentful after this as felt I ruined her purchase with the info and advice. My takeaway, people want what they want….they will justify it any number of ways and find any number of other folks to blame if it goes badly.

              • trapper on 09/02/2023 - 12:03
                +2

                @Daniel Plainview: The people buying over the last 20 years were not investment gurus.

                They just maxed out their borrowing capacity and hoped for the best.

                Interest rates kept dropping and prices kept rising, so they cleaned up.

                Recent buyers just did the same thing, but weren't so lucky.

                • Daniel Plainview on 09/02/2023 - 12:21

                  @trapper: You're generalising massively, but I'll concede this to keep it simple.

                  Unsure of what your point is though? It's like saying I stood at the roulette table, watched black come up 10 times in a row and so put all my $$$ on black and then red came up and I lost a heap. Am I somehow a victim as I only did what I saw others do and clean up, or should I have applied additional knowledge to the matter commensurate with the risk I was taking?

                  Silly example yes, but the point could be made with the share markets, investing in all kinds of stuff etc. You do not need to be an 'investment guru' to know the difference between something being a good idea and not.

                  It was a greed & FOMO situation - and as with the share markets this can work out great but it can also lose you a lot of money.

                  The thing that is lost in all this is that unlike other assets, there's a myriad of ways that this still works out just fine for under stress property investors/owners - but with shares etc you're pretty much stuffed, a capital loss offset on your next gain is about as good as it gets.

                  Thats why the OPs advice on getting financial advice BEFORE it starts to bite is meaningful, blaming others for your loan and your purchase is not.

          • Omarko on 12/02/2023 - 06:46
            -1

            @Daniel Plainview: thats bull … when borrowing 1.5-2yrs ago, everyone did the usual +3% test .. however, nobody would have thought it will go to +5% or more … come on, that kind of jump nobody could predict so I wish ppl here would stop saying that those who bought 2 years ago made poor decisions as what is happening is not normal. The rate increases need to stop, or pause at least and see what happens.

            its totally unfair that a third of home owners are getting punished while others are sitting on sidelines enjoying life and going about things like nothing is going on and continue spending …

      • bigbadboogieman on 08/02/2023 - 17:59

        Severely let down because of the duplicitous / uncoordinated policies with breakdown of trust. Government is all about trust.

        On one hand government telling the general public: "Here is a scheme for buying your first home with 5% deposit" + "We will give you a first home owner's grant too if you buy new within a price range which usually only covers apartments in Sydney metro" + "Here is a break on stamp duty. Now you can pay us annually as tax instead of a huge lumpsum. No stoppers there either." + "RBA is not planning to raise interest rates by at least 2024 - you're good for 2/3 years".

        On other hand: "Sorry RBA/Governor was off his meds and made a mistake.. ooopsy. We would like to apologise and get on with our lives. You need to suck-it in though because now you're in mortgage stress trap. Don't worry though, we will help you manage your bankruptcy. Here is a tax-payer funded $100 voucher for back to school for your troubles."

        • Daniel Plainview on 08/02/2023 - 19:27

          @bigbadboogieman
          Ok…..

          Not sure what I can say back - I think folks can takeaway from your supporting argument of how people have been 'let down' what they will.

          I did ask earlier but happy to repeat, Do you feel their current financial predicament is largely due to their actions or those of other parties/persons?

          So there's a concept known as 'Blame Pie' where you aportion out a % of blame for a problem depending as who you see is largely the root cause of it.

          How would you aportion the blame the average lendee facing mortgage stress is now feeling? I assume it's just the lendee and the 'Govt' you feel are the causes but if others please flag.

          • bigbadboogieman on 08/02/2023 - 20:42
            -1

            @Daniel Plainview: It takes two to tango. I think both parties are equal to blame. The percentage doesn't matter because it still took both parties to make this pie.

            • Daniel Plainview on 09/02/2023 - 08:34
              -1

              @bigbadboogieman: Equally to blame?

              So I earn the average wage, $95,000 or so - borrow a million to buy a place with a 5% deposit, get honeymoon super low rates for a few years.

              Then the rates move from literal alltime lows - and I'm half to blame and the 'Govt' (as you didn't clarify if it was just the 'Govt' or others) is as much to fault as me on the situation I am now in, that'd be an accurate summation?

              Do you not feel - that well just as the courts would see it, on a defaulted loan like this - that it's actually the lendee that is far more or even entirely responsible for this? It is literally their loan, they took out willingly & entirely by choice.

              What more/less should the 'Govt' have done, in your opinion, so that their 50% of the responsibility is moved entirely to the lendee?

              • bigbadboogieman on 09/02/2023 - 09:10

                @Daniel Plainview: Your numbers don't add up so I can only summarise it to be a dream or made up in your mind without actually running it through a calculator.

                Even at all time low, you wouldn't get a $1m loan at $95K income. You probably think everyone that got stuck in mortgage is stupid but they are not.

                The scenario adds up more like they earned $95K, bought a ~$500K apartment with 5% deposit. Now feeling a bad pinch because the rake hikes have added a $1000 to their mortgage per month.

                • Daniel Plainview on 09/02/2023 - 10:50

                  @bigbadboogieman: :-/ They were made up - I'm neither a broker nor need actual figures to try and understand your assertion that the blame is equally on both the Govt and the lendee - which is preposterous but thats your opinion.

                  I've no idea how intelligent folks are that borrow money - not sure why you'd say that or what is has to do with anything.

                  Your example, seems a little conservative - given that as this article I'd posted earlier states that in 2022 the average household income was ~$91k and the average mortgage was ~$620k. Seeing as you weren't happy with my admitedly very made up figures.

                  So I'll ask again….What more/less should the 'Govt' have done, in your opinion, so that their 50% of the responsibility is moved entirely to the lendee?

                  • bigbadboogieman on 09/02/2023 - 11:14

                    @Daniel Plainview: For starters, the carrots should never have been in place. The scenario I posted is a very real scenario. The family would not have been able to afford buying the home without 5% deposit + no stamp duty for first home buyer + first home owner's grant + artificially lower interest rates. The thoughts in their mind were that the interest amount per week was less than $200 at the time of purchase so it was lower than their current weekly rent. The only thing I can blame on this family is being naive in trusting the government for having their back. Yes, they were let down by the government.

                    Ref calcs: All time low rate as 1.99%, today's rate is 5.05%, Difference due to rate hike is $15300 annual or $1275 extra per month ($295 per week extra on top of the $200 mentioned earlier). Loan amount is ~500K.

                    Sadly that apartment will probably not sell for 500K+ in today's market.

                    • Daniel Plainview on 09/02/2023 - 11:42

                      @bigbadboogieman: So the Govt(you've not clarified but I've assumed this is just the Australian Govt) gets 50% of the 'blame' for having 'carrots' in place? That seems a tad odd.

                      You posted a scenario - I posted what the literal average figures were, sourced and referenced.

                      Even those on here wishing to blame the Govt as having any responsibility don't say they shouldn't have had any assistance in place - if anything they seem to feel they should have had/done more.

                      You say the Lendee was 'naive in trusting the government for having their back.' ? Ummm well thats just deluded, not naive. The Govt was never a guarantor to their loan.

                      I don't have great experience in this area but within the past year I had to convince a person not to borrow $600k+ to purchase a property as I felt it was well beyond their means. It took me hours and much of my little sanity but they eventually did what I advised.

                      I'm 100% certain they'd have lost their own home IF they'd taken this loan, as they were using the equity in it to leverage this additional loan and are a quite low income worker. But their mentality is exactly what i see in this thread, they felt incredibly low rates - were bord from COVID so keen to have an exciting purchase - and wanted to max out their credit.

                      haha and not that it matters but they were anything but grateful for being saved - playing the classic kill the messenger on me. Go figure.

  • Preet on 08/02/2023 - 16:51

    I was one of those "1000's of Aussies" with a fix rate of 1.99% until August 2023.

    I ended it early and locked in 5% for 5 years. I'd rather have a fixed amount as it's way easier to budget.
    Sure in 4 years time we might be back to 2% but that's ok, I don't mind.

    At the current snails pace of rate hikes, I don't see it being sorted out any time soon.
    I also feel the rate cutes may take even longer to settle back to 2% or less.

    Ironically, the amount I'm paying now is what my mortgage was when I first got it. So no scary surprises there.

    • ttt888 on 08/02/2023 - 16:53
      +1

      Why would rates settle back to 2% that's just crazy. Keep inflating the Assest bubble and one day everything will burst.

    • Brianqpr on 08/02/2023 - 17:03
      +2

      The rises havn't hit properly yet. 800k loans coming off fixed this year alone.

      RBA too driven by media noise rather than proper long term planning.

    • trapper on 08/02/2023 - 17:19
      +1

      I also feel the rate cutes may take even longer to settle back to 2% or less.

      We will probably never see rates that low again though.

      I think we will be lucky if ~5% ends up being the new norm.

    • Korban Dallas on 09/02/2023 - 03:05
      +1

      Smart move. We did the same but for 2 years

  • ttt888 on 08/02/2023 - 16:52
    +2

    Pre pandemic average rates world wide is like 4%

    And if Oz can't withstand up to 4% rba rates the problem is us not anyone else.

    No one to blame.

    • Nebargains on 09/02/2023 - 13:24
      +1

      The problem isn't the rate, it is the rate plus the fact that due to inflation everything is more expensive.

      So when rates were 4% but everything wasn't going up in price like crazy, no big deal, but now it is like 5% and everything is way more expensive than when the rate was 4% prepandemic.

      • ttt888 on 09/02/2023 - 13:54

        OK then we need rate to be 8% then to bring the inflation down.

        Slammed it hard vs slow drip water toture.

  • djohn7 on 08/02/2023 - 16:52
    +1

    It’s a big annoyance more than anything, we’ve got a lot going on in our lives right now.. legal disputes, countless special levy’s (likely more to come) going to lose one income due to starting family in near future, aging parents and then of course inflation and interest rates.
    We’re just trying to batten down the hatches and build up the war chest while we still can (still on fixed rates until end of this year)

  • [Deactivated] on 08/02/2023 - 16:55
    -3

    Scamdemic — Shut down businesses — Free Covid Money & Massive Savings 'yay' — Reduce Interest Rates to +-0 'Yay' — Stimulate with HomeBuilder 'yay' — Increased Demand, Decreased Supply and Increased Costs -> Property Inflates -> Gov RBA reassures to buyers at the top (TINA), RBA Rugpull, Inflation and Interest rate rises
    Your politicians pulled the long con - sorry suckers what did you expect from your benevolent sociopaths - that they would never get around to F*ing you too? What did you think would happen?

    Magically the Banks are recapitalised, immigration welcome and the asset class left you holding the bag.
    Renters will be hit with higher competition and investors seeking market returns equivalent to cash at bank.
    Rents higher & Repayments higher & Costs of Living Higher - There is no escape - the boomers like cockroaches will survive unless the 5th jab does it's job.

    Heaven help us if we have to prepare for an historic pivot from China and Russia and a seismic shift in supply chains.

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