And did it again
RBA hikes rates again increased the cash rate by 25 basis points, bringing it to 4.10 per cent.
rba #philliplowe #mortgage
What’s your thought ?
I see that There will be people selling their house and some becoming homeless
RBA Increased The Rate Again, to 4.1% (June 2023)
rahoolz on 06/06/2023 - 14:46
Last edited 06/06/2023 - 15:34 by 1 other user
Last edited 06/06/2023 - 15:34 by 1 other user
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@Ozybargdias: "Australian property market has become a get rich quick scheme for investors."
You said what Lowe can't
@Ozybargdias: And politicians on both sides, inc greens,Nats etc are mute for the same reasons. Hypocrisy.
@Protractor: Everyone's scared of offending the boomers who moved away from the stock market after the crash in the 80s.
The interesting thing is, a report released recently said that for 60% of investors purchasing properties between 1990 and 2020 and holding for between 4-10years, investing in super would have netted 1% higher returns. There's obviously going to be caveats, but it's a strange situation the way Australia (and NZ) has moved so unanimously toward property investment as a "safe" option.@DeToxin: It's a model based on a psyche. It's the DNA of one side of politics to promote walking on top of others. Howard validated greed and the flock got on board in spades.
@DeToxin: Got a link to that report? Boomers are a superstitious lot and that’s due to a lack of financial education.
@Ghost47: I think it was from PEXA and LongView. Not sure how big they are but it popped up on my news feed a while back
@Ozybargdias: He's right on that, but when Shorten tried to campaign on doing something about it, the Murdoch machine shut him down and we got Morrison instead. As a result Albo won't go near the issue.
@Brianqpr: Yep, if neg gearing had been reigned in, after the 1st investment property we would be facing better days housing supply and rent cost .Even better had we filtered how,what & why foreign raiders could own residential property in Australia. I'd like to see the govt publish hard data on purely investor built and purchased properties post Morrisons accidental victory until today, and run (independent) modelling on the probable outcomes. There are a few times when we can benefit from scrutinising past policies.
The govt will almost have a social license to go after neg gearing if the ALP states all reform rental laws like WA is.The 1/3 of Australians who rent and the incoming 1 Million migrants wouldn't complain.
@Ozybargdias: That is simply not how supply and demand work. If a home owner becomes a renter, or a renter becomes a home owner demand and supply stays exactly the same.
There is upward pressure on house prices because the population is increasing and house building is always lagging.
And as for property being a get rich quick scheme, it isn't actually a very good one. Investing in property gives no better returns than investing in the stock market historically.
No better returns than investing in the stock market
Yeah, if you don't count the enormous tax savings to be had through negative gearing and CGT discounts. That's the reason Australians prefer to pump billions of borrowed dollars into properties rather than index funds.
@Ozybargdias: You do realize stock can be negatively geared and also qualify for the same CGT discount…..
@Ozybargdias: Negative gearing and CGT discounts apply to shares as well, in fact they apply to every type of investment. They are not tax breaks or tax savings, they are the way all investments are treated.
@Ozybargdias: Negative gearing and CGT discounts apply equally to share investments. Its not something exclusive to property investing.
Properties only get valued when bought or sold, so appear less volatile. People also forget the myriad expenses involved in buying and holding one when they finally sell.
As part of my job I've reviewed many self managed super funds (SMSFs) that have invested in residential property. Unlike non super investments, SMSFs have to have audited financial statements every year. It is one hell of an eye opener as to the real returns and costs on property investment. Seen a lot of people blow their retirement savings using this strategy when staying in a regular super fund would have seen them much better off.
@Brianqpr: I’ve also seen some SMSF with property.
Some/most SMSFs which were set up in with the sole purpose by a one stop property investment adviser to purchase property have done very poorly.
Buying overinflated off the plan townhouses/units/houses.
I feel sorry for them.
I’m not sure how these property advisers get away with it.
@JimB: I'll tell you how. They get a financial adviser to come in and set up the SMSF (do the compliance stuff etc) and then they cop the compensation request when it all goes wrong despite 95% of it being driven by the property brokers.
@Brianqpr: I’d also say that the financial planner is involved.
SMSF and investment strategy is set up with property as the sole investment asset with LRBA loan of course. Nothing wrong with that.
Financially planner doesn’t directly recommend which exact property to buy. That’s when old mate property adviser who works in the office down the hallway gets involved and recommends dud property.
Who gets sued? I’m not sure.
But I feel sorry for the investors who invest their super in these scheme due to FOMO
@JimB: The adviser sometimes cops the lot, despite often being a fairly minor part in the overall process. Property developers/brokers recommend the strategy and select the property. They need the adviser to set it up and do the compliance stuff.
I've managed AFCA complaints where this has been the outcome. I had one where AFCA agreed (as did the customer until she realised AFCA couldn't punish the brokers and the story changed…) the brokers actually provided the advice but AFCA could not do anything under their rules (which have since been changed to close this loophole), so they initially just dumped it all on the adviser's licensee which was completely unfair. We managed to get it partly overturned by the Ombudsman at the final determination.
Its a dangerous strategy as there is zero diversity in the investment. Some of the properties chosen are absolute duds also. The brokers play on the perception that you can't lose with property, but I've seen many cases where you absolutely can lose and lose very big.
@Brianqpr: Thanks for the info.
I work in the financial planning industry and we’ve been approached by property advisers wanting us to set up the SMSF. I’ve politely declined.
I’ve also declined sign offs on LRBA and reverse mortgages from mortgage brokers.
Too risky signing my name.
I’ve never set up a SMSF for the sole purpose of buying properties. I don’t get paid for it so I won’t sign off on it but I can see how it’s a valid investment strategy. Just DIY and don’t look for me when something goes wrong.
I don’t see why ‘property advisers’ and mortgage brokers don’t have same duty of care/compliance requirement as financial planners for retail investors.
@Brianqpr: There I was thinking if you invested in property in an SMSF that you could end up ahead compared to investing in property outside of an SMSF.
I’d rather just contribute as much as I can into my REST Super fund (invested in the indexed options which have 0 fees) for the rest of my working days and then access that when I retire.
returns than investing in the stock market historically.
but most of properties purchases are geared/leveraged at 5x-10x by mortgages.
@Ozybargdias: The Intergenerational Report projected that Australia’s population will swell by 13.1 million people (~50%) over 40 years to 38.8 million people – equivalent to adding a combined Sydney, Melbourne and Brisbane to Australia’s current population. And this will be driven by projected annual net overseas migration of 235,000 – i.e. 20,000 a year higher than what occurred between 2005 and 2020.
Real solution is to cut immigration
@AnotherCheapo: 100% we are increasing the population by 2% but are not adding 2% to the housing stock.
@tomfool: There's also the flow on affect of adding further % to immigration levels via family reunion policies.
10 bums on seats becomes 100 in a few years time via this concept, and not all of the incoming bums are + on the productivity side of the equation.
Except credit is restricted so no one can afford to build.
The problem is not credit. It's building materials and to a far lesser extent labour.
Been hearing this for around 20 years now.
Cool, now tell us about the time the cash rate increased by this much or this quickly in the last 20 years.
@Ozybargdias: ppffft, next you'll be saying that CO2 levels are a problem for the same reason. Sure buddy /s
People have been saying for decades that we have a property bubble, and prognosticating the the bubble would soon burst and prices come crashing down. Just like apocalyptic environmentalists, these economists are always wrong. Prices just keep going up. People are wealthier than ever and are willing to plough most of their money into a house. Houses are the most secure, highest yielding form of investment.
The number of humans wanting housing is increasing, but the amount of land available is fixed. Competition/demand increases prices. Prices will only level off when the population stabilized. "Affordable housing" is an oxymoron.
Completely ignoring the fact that not everyone can buy a house due to borrowing costs but ok
Dunno- I find stats are much better indicator
10.9m properties and 6m of them have a mortgage at the moment.
Current arrears (30 days behind repayments) is sitting at .82%
Even if that goes to 2%- that will be 120k homes. How many do we think would actually sell? Banks are already talking about reducing the criteria for refinancing (westpac is already doing this).
I don't think I agree with what you are proposing based on hard data.
I've been hearing this for 15 years
Cue posts saying the rise is inflationary despite record company profits. Can't let the bottom workers of society get a bigger cut of the profits.
Can't let the bottom workers of society
get a bigger cut of the profitsafford the cost of living.Cue posts saying the rise is inflationary
RBA chief is on ozbargain now? Can't actually get a 'bigger cut' when my extra $70 a week is negated after my landlord raises rent by $100 a week, not to mention every small business decides to pass on costs to consumers. As well as people's grocery bills increasing by 25-50% as major grocery chains use this wage increase as an excuse to profiteer.
People who claim this has somehow solved anything are usually financially secure and want internet brownie points for 'supporting low wage workers', or are just bad with money and don't realise they're paying more for shit and just like the dopamine boost of seeing a few extra numbers in their bank account despite it being worthless.
Noone is claiming this solved anything. A lot of people are claiming that increasing the minimum wage will add to inflation
Noone is claiming this solved anything
Didn't neg, but there are a good amount of people here and especially on the wage increase poll thread criticising anyone for even bringing up inflation and accusing them of 'not supporting minimum wage workers' for stating the increase didn't solve anything. Then again these people have no answer when you bring interest rate rises and the fact that peoples' rents are going to jump..
@[Deactivated]: I was one of those people.
I am of the view that someone who works 40 hours a week should be able to survive. If the cost of living goes up, so should the minimum wage - that is why it is called the minimum wage.
People are worried about rents and inflation going up for themselves while ignoring the context.
Are we to establish a slave class so that inflation might not go up as much? Because that is what you are saying if you are against increasing the minimum wage.
"Noone is claiming this solved anything"
"I am of the view that someone who works 40 hours a week should be able to survive"
…these two negate each other. I agree with point #2
People are worried about rents and inflation going up for themselves.
It goes up for everyone. Many people can stomach these costs but are questioning the point if "This didn't solved anything" and min-wage workers are going to see no difference in their buying power if their expenses (rents, utility and grocery bills) are expected to increase or even surpass their wage increase anyway because of this change.
Are we to establish a slave class so that inflation might not go up as much.
Looking at living and work conditions for several people in the country we already have(saying this as an ex-hospitality worker as well. Also 40 hrs is a pipedream it's usually a lot higher/many times unpaid). All we've done is make said class bigger by decreasing the buying power of people who were already on the new wage and saw no increase and are also now going to face the same difficulties.
@[Deactivated]: It did not solve anything because the minimum wage increase is less than the lost purchasing power for people on the minimum wage.
And yet - people are saying minimum wages shouldn't increase.
That is the context that seems to be ignored. Minimum wage workers aren't responsible for inflation
Workers on minimum wage get an 8.65% increase on 1/7/2023.
How is interest affecting small businesses? Surely some small business have business loans and it’s also going up? Plus higher min wages? Keep jacking up the price on services? Which increase inflation and more interest rise?
So either ppl stop eating out and cafe goes out of business or fire half of their staff? Or we play this game every month till everything breaks?
Sounds like rba wants unemployment to go up and spending to go down. Aka they want business to fire ppl or to just shut up shop. Isn’t that it? Throw in some more bankruptcies and house defaults.
Sounds like rba wants unemployment to go up and spending to go down. Aka they want business to fire ppl or to just shut up shop. Isn’t that it? Throw in some more bankruptcies and house defaults.
That's exactly what they want, the poorest working class have always been the cushioning/padding the RBA/gov relies on to absorb the results of increasing rates. The middle class pays for them (partly) via tax and welfare.
The upper middle class and rich are the ones benefiting from this, because the flip side of the poor being a cushion is they are printing money (creating currency) using the property market as the primary vehicle to do so.Hi, small/medium accounting and finance business here.
Profits are up, wages are up, being recruiting and hiring more staff, extremely tight labour market. Difficult to find staff. Augmenting a lot of our business services with AI and training staff up on using AI to accelerate productivity.
It's affected my business partner's purchasing power and we can no longer afford a staff working 20 hours a week. It's also pushed them to sell the business, both my business partners cannot work 70 hours a week each anymore and one of them is at retirement age.
According to business brokers the VISA market is buying up businesses like crazy at the moment and there's still cashed up local buyers.
I just want out, the proceeds are going to 1 bedroom apartment once we sell, I gave up waiting to build in Tarneit and I cannot live at home forever. Just shit.
Fast food business here (20+ employees) we're definitely hurting with the rates going up, our loan has increased $500 a month, sales are down since people are spending less on discretionary spending in general, profits are down, wages are up and cost of goods is definitely up. There's no possible way we can keep raising prices. We've had to cut hours where we can (you also cant cut hours that much unless you want the shop to fall apart). It's definitely tough, we're just trying to get through the next 1-2 years.
Uhh yea that's actually exactly what they want. This is how modern economists (rightly or wrongly) balance supply and demand, and unemployment is a lead indicator of waning demand and lower economic activity.
Invest in Tents and Blue Tarps…..I predict a huge surge in demand!!!
No no no… invest in companies that rent tents and blue tarps!
Government to announce extension of negative gearing of tents to investors and creation of first tent buyer grants.
Invest in companies contracted by government to help struggling people.
My thoughts? Lovin it.
If people can’t handle a rate that’s close to the long term average they dun goofed.
Give me more rate increases let’s go to 10%. Based Lowe = Best Lowe.
Aww overleveraged people who think a million bucks is easy to come by have downvoted me 🤣
The downvotes are probably because you sound like a condescending cu….
I sure did ruffle some feathers.
I down voted you because you're sharing a really poor grasp of economics, yet smugly acting as though you made smart tactical maneuvering to reach a secure position.
tldr dunning-kruger post
@Ghost47: You implied the long term interest rate average is a norm that should simply be accepted as a fact of the economy,
you implied that rate increases are a good thing for you,
and you implied that people being over-leveraged is stupidity, when that's what the system is designed to strong-arm people to do. It's only slightly less nonsensical than telling poor people to "stop being poor".
The only reason you would "love" this economic environment is if you don't understand money creation, bust cycles, bail-in risks, social repercussions, etc etcfwiw i'm debt free and have a HISA that benefits from rate rises, i'm not leveraged at all.
You implied the long term interest rate average is a norm that should simply be accepted as a fact of the economy,
I did not imply it was a norm nor did I imply it was a "fact of the economy". I said "a rate that's close to the long term average" and what I said is correct, the long term average is 3.84%. If anything, I was implying that rates go up.
you implied that rate increases are a good thing for you,
Oh, so you know what's better for me do you? They are good for me because I have money in the bank. Before you go on about how these rate increases will inevitably lead to a recession and how I'll lose my job and therefore an income, I already have that covered.
and you implied that people being over-leveraged is stupidity, when that's what the system is designed to strong-arm people to do.
Stupid talk. People go out and willingly sign contracts to borrow loads of money to buy property. They are not strong-armed to do it and that's a completely silly thing to say as if they have no choice in the matter. You don't have to go out and borrow the maximum amount you're approved for. No one holds a gun to your head to take out a mortgage do they? No one holds a gun to your head to get on the property ladder do they?
The only reason you would "love" this economic environment is if you don't understand money creation, bust cycles, bail-in risks, social repercussions, etc etc
Oh I understand plenty about what's happening and I understand the social effects that occur from increasing rates especially when we have one of the highest DTI ratios in the world.
fwiw i'm debt free and have a HISA that benefits from rate rises, i'm not leveraged at all.
Me too, doesn't mean you're right though.
@ssfps: Thoughtful post but I have to disagree ssfps…
You implied the long term interest rate average is a norm that should simply be accepted as a fact of the economy
The historical long-term average should be considered. Nobody can predict future but it's perilous to never consider the past.
You implied that rate increases are a good thing for you
This is the statement that rubs me the wrong way the most and I hear it all the time (I listen to talkback radio). If you measure my wealth as my capacity to buy porterhouse steak at Woolies, it's true my wealth has been absolutely trashed since the pandemic. But I need the radio callers to understand that most people don't go to Woolies and say "I have $X in my bank account, give me it all in steak." For people who spend little and save a lot, high interest rates can be beneficial particularly if they reduce house prices and that person has never purchased a house because they've never been a bargain. Such people in particular might be attracted to a website named OzBargain.
you implied that people being over-leveraged is stupidity, when that's what the system is designed to strong-arm people to do
A huge failing of the system. But the under-leveraged waiting to buy a house have been suffering too.
The only reason you would "love" this economic environment is if you don't understand money creation, bust cycles, bail-in risks, social repercussions, etc etc
In 2007, I was in WA - everyone thought they were going to be rich - that was an economic environment to "love". I never experienced that again, can I boldly suggest most people will spend most of their lives not loving the economic environment they're in. You just roll with it. And if someone else finds happiness in it, good for them.
@ssfps: If you had no debt and lots of cash and assets, you'd be loving this decision - economics 101.
Not everyone is in the same situation. For instance, I think a third of homeowners own their property outright. That's a lot of people.
economics 101
It benefits me in a direct fashion, but i'm still losing money to inflation, and it still contributes to wealth consolidation. Anybody looking at the larger picture should be pretty apathetic towards the rates, unless they're part of the banking cartel or one of their puppets/sycophants.
you must have a crystal ball sir?
Good for them.
#mortage
What’s your thought ?
Spelling lessons.
Plural : mortise
2nd declension neuter : mortum
Real estate agent = mortician?
Enter trainloads of 'it's all Andrews fault.
There would be ppl leaping off skyscrapers if Fungus Taylor was treasurer.
Get used to it. Another million ppl should help the equation. (not)It is all Andrews's fault.
That's either a grammatical correction or a statement of fact. Either way, you're welcome. 😏
Polly want a cracker?
I do really loathe the guy. Hopefully he introduces his promised rental caps and I can take a break from being a full-time hater.
Getting quotes for the OzBargain 2023 hoodies just then. Same brand, same company, same quantity, same print and the new quote is almost 28% more than our 2021 batch of hoodies. Inflation is real.
Now I need to raise the OzBargain Premium subscription fee.
Sorry Scotty, I have to feed my kids.
I may have to give up my platinum membership.
Just goto the cancel membership page.
Ozbargain will give you a 50% off for 3 months coupon if you decide to stay.OzBargain used to do it for Gold and Silver, but never for Platinum membership.
I’m devastated.
I VPN into Turkiye and get 80% discount off my OzB platinum membership
might have to tighten our belts and go for smaller sizes
XL is the smallest size printed for OzBargainers. Screen fixation and too much Lotus Biscoff Spread.
Consider the Uber Eats model. Introduce a service fee for new deals, then introduce a monthly subscription service that allows users to avoid the new service fee.
I'd upvote but I don't want this :P
Do you accept kidneys as payments for premium subscription?
RBA are going to blame you for their decision next month. How can you do this to us?
the new quote is almost 28% more than our 2021
You may need to get working on a bargain website then
OzNoLongerBargain
OzBar-gone
TBF most of the deals lately are Ozbackinstock Ps5 and Switch 'deals'.
Bargains are harder to find…
Real question - why no premium with no adverts?
inb4 UsE aDbLoCkErS I, for one, support my OzB by not blocking ads on this website
They probably make more from ads than a premium subscription would be worth. Advertisers pay top-dollar for the main demographics of Ozbargain, especially for financial products.
We need Afterpay for Ozbargain premium membership.
Lucky me, bought lifetime membership :)
Ozb singlet will do.
Or, briefs.
I never knew ozb had hoodies! I'm missing some of my collection….
Seems a bit ridiculous putting the burden repeatedly on one group of people (those with debt).
The people also likely to have less discretional spending and the least impact on demand.With the people receiving the benefit (investors) likely to increase spending.
GST would seem a much more effective tool.
We only have a shortage of supply because there is huge demand, and we only have huge demand because the Australian property market has become a get rich quick scheme for investors. Without speculation driving up demand, there would be more than enough supply for everyone.