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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@brendanm: For those with that type of savings, how many would be buying a house for $500k? I'd say virtually none.
Sure, financially it makes sense, but people love to flaunt what they have (or purchased on credit).My whole point it, we have a narrative that borrowers have largely been reckless, taking out huge loans and living in mansions in premium suburbs.
And/or buying houses/stuff they cannot afford. The narrative of critiquing induvial households and choices. Sure some have done this and they should probably sell and adjust their expectations.But for most households entering the housing market (at any price point) in the last 5 years, they have to pay market rates. Even the most basic apartment in a big city is around $300k.
Seems to be typical argument, critique the induvial. Remember "too many smashes avo breakfasts"?
Ignore/unplay huge corporate profits and greed and generous tax breaks to business and the wealthy. Which if seriously addressed, would potentially also combat inflation, but is politically very dangerous and the Coalition would jump on Labor.
Regardless, no genuine will to do this from any major political party…. yet… But things might have to change eventually if rates keep going up.
@Top G: Disagree rising interest rates is not good - it artificially freezes the property market and does zero to stop genuine inflation which is mainly crappy financial spending/management on our govt's behalf, and yet they try bestow the blame on everyday spending of the public HA.
So what we have here is the syphoning wealth from millennials, who as a collective are in debt are trying to hang on to homes.
Boomers/Investors are gaining interest on their fat stacks so happy with any rate rise.. higher the better and waiting for anyone to buckle on the sidelines.
When s**t hits the fan they'll be snapping up any properties that are sold, there will NOT be a crash in the property market, might be a 5-10% dip due to the sheer hunger of the vultures, and the cycle continues - then interest rates will drop again house prices will soar once more. Rinse and repeat.
I think you need a reality check on what you define as "comfortable". An apartment 15kms from the CBD is totally acceptable in any major capital city across the globe. Even if you have a family with kids.
The days of quarter acre blocks within 20kms of a CBD is no longer a reality for average punters, and hasn't really been for decades. People need to wake up
Even if you have a family with kids.
Not the apartments they build in Australia. 2 bedroom '78sqm' apartment isn't enough for a family
@greatlamp: Define enough?
78sqm of living space would be considered luxury for many world class cities across the world be it in North America, Asia and parts of Europe. Many families can only dream of having a space where adults and kids can at the very least sleep in separate rooms, or even a balcony to get some fresh air. Why should Australian cities who love to claim they are on par with other global cities be any different?
But I digress - in cities like Melbourne and Sydney, there are plenty of affordable inner city apartments that are decently sized (above 78sqm) and within the realms of affordability for average income earners (but ofcourse iT's ToO oLd!!!!). If it doesn't suit your lifestyle, live further out? It boggles my mind how good we have it here and people still complain. Try living in New York, Hong Kong, Tokyo, London etc - it'll give you a proper reason to whinge about affordability and cramped living spaces.
If you're still going out, even for coffee, you can still take rate rises.
When you're not turning on the heating/cooling, eating stretched casseroles for days and giving up staying home with the kids to get more work to cover the mortgage, that's when you're starting to get nearer difficulties.
And, the banks expect it. Can't go cap in hand asking for a mortgage pause if you can't demonstrate you're genuinely on the bare bones of your backside.
@topg
Why do we need to be like every other country and live in high density? Should we allow developers and governments to continue until major cities are like Hong Kong?
Get real. Increasing our population where there isn't an endless amount of food, water, infrastructure, services, schools, hospitals is insane.
This need of wanting a big Australia is so silly and will end in tears. Why should we sacrifice our lifestyles and way of life? What benefits does it bring other then more profit for corporations?
Because at some point in time, people in Australia made that same sacrifice for you and your family to migrate here for a better life.
Now that you have it good, you're saying others can't have it…because you want a big backyard
Basically "f**k off we're full"
Why? Because societies and communities change as time passes and particularly, population increases.
It would be selfish to expect things to not change because it does not benefit you.
15km+ from the city
how ghastly
commuting 30 mins each way, that would just be the end of me
15km commute in peak hour traffic taking half an hour? Not even on a Sunday morning would that happen!
Do you live in Tasmania?In Melbourne, where I live, most 15km trips in peak hour would take 60-90 minutes each way on average.
So potentially 3 hours of travel each day if living that far from work (if travelling from the burbs to city).so commute it, you think 1.5 hours is that bad, its hardly the end of the world.
can you not get a train some of the wayand no i live in Sydney / Brisbane, have lived in london so i know what traffic is like
some people in this world walk 1.5 hours just to get water every day
@Donaldhump: If everyone just moved further and further out to the urban fringe, without proper investment in public/road transport (which is largely the case now) it wouldn't really solve anything. But it's a part of the mix for sure.
But a house in the urban fringe isn't really cheaper than a unit/apartment in the suburbs.
So what is your point?@Muselibar: So if everyone only wants to live closer and closer to CBD's, how do you think this is possible?
Pretty universal concept of having more desirable/less desirable parts of any city.
Also universal is the fact that there are different income/wealth brackets that dictate where people can afford to live
Living in the fringes of the city due to affordability is not a new concept. I grew up in Sydney in the 90's and our family would be considered middle income. Even then we had to start off about 40kms from the CBD in an area where there was only 1 train every hour to the city (parents had to commute 1 - 1.5 hours to the city for work each way - bear in mind this was a time before smart phones)
Over the years as we accumulated more wealth we moved closer and closer to the city in more desirable areas.
For most millenials these days this gradual progression would be unacceptable. Nothing has changed except for peoples entitlement and lack of patience/sacrifice to earn their way into a better life.
@Muselibar: wtf does that have to do with you not wanting to live 15kms from the city?
sounds like you cant commute 1.5 hours to work (which for 15kms sounds b.s as would be trains) , but wants to complain that you cant afford anything
join the club
@Donaldhump: It's not BS, half of Melbourne doesn't have access to trains, 1.5 hour commute is expected. The fact that you think this is an exaggeration shows how big an issue it is.
@greatlamp: so what commute it or move to brisbane / perth / hobart
its not great but its hardly back breaking.take me 75 mins to drive home, who gives a sh*t, you just do it
its not the issue at hand, issue at hand is OP is whinging about long commute, and then whinging about how high house prices are…
@Donaldhump: Commuting time is a pretty significant factor when choosing a place to live for most people.
@greatlamp: Commuting is a big issue; however, people have to prioritise. Do people prefer to live in their own house in the suburbs and take longer commute or do they prefer to rent forever in the CBD?
I have friends living in the city, living the single life and paying very high amounts of rent that won't allow them to save for a deposit. Then, when they really want to buy, the property will be or perhaps already is out of their reach.
I've heard of many people not buying a property because they couldn't afford a property close enough to the city, but they would have afforded to buy in the suburbs. I guess their lose.
@greatlamp: Werribee to the CBD takes about 45 mins on a train in peak hour. Werribee would be more than affordable (even houses) for an average income earner. Where did 1.5 hours come from?
Don't use commute times as a mask for the fact that young people nowadays simply don't want to live in areas like Werribee because its "embarrassing" or "not desirable"
@bobolo: I pointed out above, there are many suburbs that do not have a local train station. Taking a bus to a train station makes for a 1.5 hour journey.
@greatlamp: And what I'm saying is, there are equally as many affordable suburbs with very accessible trains and buses.
You could easily find affordable houses within walking distance to the train station in Werribee. Are you going to calculate the walking time as well?
I live 7kms to the CBD. Still takes me at least 30 mins commute door to door on a good day. I guess I'll also have a whinge about my suburb with a median house price of $3.5m as well?
@greatlamp: f*** me, I never realized this, thanks for the great insight. I thought people frothed on long commutes.
do you not think that is why why prices are expensive in the cities.
so if you can't afford to live close to city then you have 2 choices.1.) buy what u can afford and slowly upgrade
2.) rent in city your whole lifeand
3,) optionally whinge on oz bargain.
who gives a sh*t, you just do it
Clearly you don't think it is an issue. it is difficult to discuss problems when they are just called 'whinging'.
@greatlamp: it is an issue, but you nor I can solve it, it will never be solved and only get worse, as this innovationless country that encourages people to work in offices,and just brings in more immigrants to fuel the ponzi scheme, but what choice do you have.
1.) you either rent in city and never own and whinge forever.
2.) do what every other person has had to and buy a house they can afford in a shithole suburb, with only 3 bedrooms, i garage etc and live in it for 5 years and slowly upgrade.
3.) get a pimp ass job so can buy a place in city
4.) buy a shithole live in it for one year, then rentvest by moving back to city
what else do you want me / others to say..
@greatlamp: https://www.realestate.com.au/property-house-vic-werribee-14… $470k
train 40 minutes to city
seriously? that is dirt fkn cheap
train is $10 a day, cheaper than s.e. qld
@greatlamp: Live where you can afford.
Obviously you don't like commuting because heck, most people don't. But what is the point when you have champagne tastes but have beer money?
@greatlamp: It is a huge consideration for me. I don't want to spend countless hours idling in a car or public transport. No thanks.
Just want to say I hate commuting so I'm on your side.
I moved ~30km from work and it's now a 1hr commute door to door in Melbourne, which I'm mostly on the ringroad and not going into the city. I hate it.
I will happily be prioritising proximity to work on my next move no matter the cost. Commuting is the biggest waste of my own time outside of work
@ninnypoop: no one likes commuting, and that is why house near the CBD cost more.
why not get a job closer to home, or do they not exist / pay sh*t.
1 hr is hardly bad either. get on a train line and read a book watch tv
Surely hospitality is taking a hit? I can't be the only one doing this?
I wouldn’t be so quick to assume many people are in the same situation as you sadly. I’ve seen in the news lately that data says it’s the older cashed up retired boomers who are still spending heaps and have increased their spending post pandemic.
Anecdotal but the restaurants I’ve seen are still very busy.
Wages up 3.7% for the 12 months to the end of March. But thats not for everyone theres quite a few in the lower middle income earners around the 2 to 2.5% wage increase.
I'd hate to be just starting out now the way the housing market is. Trying to put money away for my kids now because dont know where housing etc going to be in 10 - 15 years time.
I really do fail to see how increasing rates further does anything but gift the banks a record profit. Business owners have little choice but to inflate their prices to pay for their own bills.
It's like they make it up as they go along.
They don't have any idea
Wages "up 3.7%", except I work in small business. Slaved away for years building up to a great wage building my own programs etc. to get ahead. Now in the last 12 months my mortgage repayments are up 37%. What was the point of working to get ahead? To be in the same position now.
Then Mr. Lowe, total FW says this morning just work more and spend less. There is no more work that can be done, have maximised my productivity. But thanks for the advice champ.
Indeed very sloppy messaging from Mr. Lowe telling people to work more and spend less. The guy probably earns $300k+ a year so easy for him to say and makes him look totally out of touch with most people.
But probably on a national level what he says has some truth which is probably what he meant?But the point I was trying to make before, for those already working fulltime and who have already cut back spending. What are we suppose to do?
I already have a post-grad degree so I can't really upskill easily.
I already earn a decent amount of money and work fulltime so I can't easily just work more or earn more. Where would I find the time?
I have a modest house/loan, so even I sold my house, it would just kick the can down the road.
Monetary policy is a blunt force instrument. In trying to steer the economy some people will be hit more than others. Unfortunately this time recent home buyers servicing solid loans are getting the short end of the stick.
Inflation is affecting the poorest the most, as their expenditure are pretty much fixed. It's also undermines business confidence due to uncertainty. It's the right way to go for now rather than being too half hearted and waiting a while between hikes.
The right way to go was to not hand out billions upon billions of dollars to people/businesses who did no work for it.
Have you considered working in a different field?
Cleaners are making 100k+
Where do I apply?
Seek.com
No need to apply, spend a few dollars and get an ABN. Buy some cleaning products and a mop. Boom you are now a cleaner.
I'm not joking, this is what one of my clients did. An overseas student, this is how he started. He now has ~10 of his uni friends as employees and his cleaning company makes north of $1m a year. He started in 2021.
You have to hustle if you want to make it.
The only people who care are people with large mortgages. And although it sucks to be them, it's also great to be them. Their property has appreciated massively since Covid, and even more massively since 2000. Rents are up, and population exploding. And they can still sell their property at a near all time high, and pay off their debt.
Hardly just that - I have a small mortgage and I care…
If I sell my house, I have nowhere to live because rentals are more than my mortgage repayments.
In the words of the RBA, just find housematesPlease don't cry poor. You have a property. If you did happen to sell, you'd pocket your CGT free bounty and be sitting pretty. It's young people that I feel sorry for.
People that rent care as well… they are massively affected.
Also I have spoken to a few business owners and they're facing employee backlash as they are asking for a raise but the business can't afford to give a decent raise with no increase cash flow…..
We are in dark times
I think it’s just gonna get worse too.
The only way out is for some ridiculous HomeKeeper scheme which I’m sure many mortgagors would chomp at the bit for.
I care, I’m trying to buy my first house and I’ll have huge interest to pay and I have no property to sell to fund it.
Doesn’t make any difference to me. Feel for the kids with massive mortgages.
There will be people selling their house and some becoming homeless
Pretty exaggerated leap. Can't they rent?
Checked rental prices lately and availability of housing?
… and don't forget Mr RBA says the landlords out of the goodness of their hearts wont pass on the rise.
and availability of housing?
When someone sells a house, there's no net change in the housing stock, perhaps more rooms.
I haven't seen anyone suffering from rate hikes other than those one or two in news channels.
Auctions are packed. Properties are sold 10-20% over asking price. Trollies are pushed overflowing at woolies.
People in my circle have saved up a lot over the low rate period. Lenders were calculating affordability at 7% even during covid period. So, I don't see why any borrower would struggle. It will take 2/3 years of high interest rates to drain the low interest rate effect.
As of now, It is just the media fear mongering for clicks. Is there any proof for people suffering?
I know several people where the mortgage brokers encouraged over declaring income, under declaring expense, using letters they would be living free with relatives instead of occupying and being very coersive in having the applicant borrow the maximum amount they could. Then putting them on interest only.
No way they can re-finance and could never afford full repayments in the first place at lower rates.
I rang one dude and told him off after they did this to a friend and got told, all good they can just sell when interest only runs out.
I would bet there's still a lot of those people in the system.That is Fraudulent and against mortgage brokers' code of conduct. Borrowers can sue the brokers for that and lenders can remove them from the profession. There are organisations like MFAA and laws like NCCA that imposes certain regulations on brokers to protect consumers.
Of course, but the people that are preyed on here won't have access to Danny Crane and they are complicit.
It was this behavior that set the stage for GFC, but for every cowboy you filter out there's 3 more ready to step in.@tonka: I love it how it is always other people's fault - greedy mortgage brokers, Dr Lowe, faceless bureaucrats at the RBA. But never, it seems, your friends who blithely signed up to huge mortgages, knowing that they could scarcely afford it. That decision is on them and only they are responsible for the mess they are in. I feel compassion for these people but for some, this lesson will be a good one for them.
@Lunarboogie: Do you not know the meaning of complicit. Or did you not bother to read my comment before you started trashing it. And the people I am thinking of really didn't have the skill set to understand the process or consequences . They were trusting of someone giving them 'qualified' advice and taken advantage of.
@tonka: Oh poor them. Mislead by unscrupulous advisors. These people - and their apologists - should suck it up and deal with the issue of their own making, instead of blaming others. The RBA shouldn't stop implementing its legislative mandate of controlling inflation just because a minority over extended themselves.
If these people didnt have the skills to realise that interest rates were never going to remain at record levels then the current situation is a salient lesson for them and others. I hope rates continue rising so that inflation can be contained. This is the greater threat for Australia than the crocodile tears of your FOMO mates.
@Lunarboogie: Poor you for not comprehending I never said they complained. They are actually unaware, just working away.
When people with no financial acumen at all engage with a company like Mortgage Choice for guidance it's understandable for them to follow that guidance.But good on you for being so disparaging of people working hard and trying have a home.
And if we want to play with logic, your 'hope' that interest rates continue rising to contain inflation means you also 'hope' that inflation remains high.
By the way I can say FOMO, FOMO, FOMO too. buzz words blah
This is why I think rate hikes should be 1% every month till we see partially filled trollies coming out of woolies.
What so people starve like a 3rd world country
Yer good idea chief, jog on now
Don't act like people take loans to eat food.
We are definitely far from the peak.
25% of house purchases were paid in cash - no mortgage.
Most boomers have ZERO exposure to rate rises. They don't have morgages, but they are spending big time contributing to inflation
Rate rises aren't working because they're just hurting people who are already in pain.
There's a huge portion of the population who simply have a large amount of cash and are continuing to spend it. Until we arrest that inflation will continue
Most boomers have ZERO exposure to rate rises. Rate rises aren't working because they're just hurting people who are already in pain.
That's exactly where Lowe and the RBA is being so useless, he seems to only have a sledgehammer to hang all his picture frames. The people actually spending are only being mildly inconvenienced by higher prices, but they still, quite fairly, spend.
Eventually even people looking to buy a house will give up and just spend whatever disposable income they have left too. Meanwhile mortgage holders and renters will just stay in a spiral of dwindling cash, spending nothing, but still being blamed for inflation.
Govt should raise the GST imo, increases revenue while slowing spending across the board. But we'll have nuclear power before that ever gets brought up lol
There's a huge portion of the population who simply have a large amount of cash and are continuing to spend it.
You'd be mad not to spend your cash with the way prices are going up all the time.
Is there any proof for people suffering?
Yeah, people are no longer buying take away coffees and eating their smashed avo every weekend. They’ve also cancelled their Netflix subscriptions.
This is what “suffering” is to many Australians, if you can believe it. They haven’t seen anything yet, and they will experience what real suffering is when it comes.
C'mon mate, there's gonna be a range of people. Some gonna be losing their jobs now on top of high interest and inflation. Some where that 'nest egg' was supposed to be to start a family, so a lifelong impact. Some gonna need to sell at losses and carry big debt. Some no big deal, some swimming in extra cash. It's a spectrum.
I have handy offset balance. So I just watch. lol..I save handsome interest on loan amount every month
Responsible man!!!
Chickens coming home to roost. We printed billions of dollars diluted our currency with fake money and inflation happens and then interest rates goes up and then recession and now we look at it and say " how could this happen?" Maybe we should have been careful about splashing that cash to everyone and anyone during covid times. Time for payback and people like me and you who work hard for the bill that is due.
What's worse is it was just handed out, no strings attached to multinational corps, many of which used it as an income stream while they saved on expenses (personally think these profit benchmarks are part of the inflation drivers).
No bridges or dams built. Scotty must have made so many new best friends.Dont give danny boy a pass while you at it.
I would say small takeaway businesses probably would have taken advantage of the handouts while making more money just as much as the large businesses did.
I've been in meetings with CFO's embarrassed by the 8 figure cash windfalls they got with no effort, accountability or real need. Not many takeaway shops got multi million dollar cheques I bet.
Some businesses ended up with more revenue just because they couldn't service their customers and still got the cheques.
Only criteria was think they would lose (30%) business at the beginning panic stages of the pandemic.
morepainplease
Eat lots of chillies until it’s red in the morning.
4.1% is still low compared to the UK, US, Canada and NZ.
And it's only 0.6% above what Joe Hockey told us were "emergency level interest rates"
Canada has a 25 year fixed mortgage and offers 10 year fixed at the same rates we pay.
USA has 30 year fixed.
It's not comparable
Rates have broader implications than just mortgages. These are the most comparable nations to Oz in terms of economic environment.
Even if interest rates were double what they are now, this would have no impact on house prices. There is too much of the population for which interest rate fluctuations have zero impact who are cashed up to the hilt or have the ability to take huge debt loads because their revenue is recession proof( eg Specialist Surgeons). If more distress sellers hit the market there are plenty of vultures waiting for opportunities so house prices will never come down on premium locations and premium housing stock. The Housing Stock that drops in price are not desirable anyway.
Roughly 25% of all sales in the eastern states – both dwellings and land – were made without a mortgage, according to the property data firm PEXA.
There you go.
Rents with the increased migration and students will definitely rise, alot more.
If landlords sell on the cheap due to interest rates or reduced tax incentives, i bet the 25% will be ready to pounce for investments.
Thus, rents will still rise.Remaining 75% will drag the price down and that 25% will loose money in comparison to other investment options.
I hope my wage will be increased by 200% after the end of this financial year so I could afford to pay my mortgage without selling my kidneys as it will be at least tripled by the time my fixed rate ends.
I hate modern Australia and spend most my time overseas. People are being reduced to project timelines and risk mitigators. Timelines exist in a dead dimension and that's why so many people feel the same way.
Population collapse in my opinion is just as responsible for this as anything else.
Expect another 3 rate rises this year
Go higher!
Looks like I'll have to stop doingas much meth and playing the pokies
Something liked a third of homes are rented, so property investors will just pass on the costs to the tennants.
A large potion have no mortgage
Another large portion have paid off a lot of their mortgage whilst the government handed out cash to those who didn't need it during covid.
People are still buying property and there's a shortage.
Unfortunately, I doubt property prices will be impacted more than just a blip.There is something VERY wrong with economics if it only gets better if a lot of people are unemployed.
With all the interest rate increases and immigration, you can bet rents will keep going up, up up!
Now theres the new changes with our FTA agreement with India from Albo
-Five year student visas, with no caps on the numbers of Indians that can study in Australia.
-From 1 July this year, Indian graduates of Australian tertiary institutions on a student visa can apply to work without visa sponsorship for up to eight years.
-Three-month visitor visas available to Indians for family or business purposes (no caps on numbers).Wish I owned an apartment to rent out.
Rates need to go up to 9% at least to have any effect on inflation.
Just look at all the stuff people are still spending big bucks on in Ozbargain
Australia would collapse at 6% cash rate.
9% is Armageddon
@Top G:
Brb, just chucking one of my spare millions into the s&p 500.