Interest Rates, where will they stop?
Apr 9th 2010, 7:17 am
#46
BE Enthusiast
Joined: Nov 2009
Location: Dullsville
Posts: 672
Re: Interest Rates, where will they stop?
I agree. What we don't want however is for prices to come down dramatically as many people will then be in negative equity and unable to sell. The very best that could happen (IMO) is for the market to stabilise and for salaries to slowly catch up with property prices. However I am sure that this pleasant scenario won't happen 
Saying that, another scenario would be if China takes a hit. Plenty of observers are now calling the China story unsustainable and they'll have to pull back on their growth which would affect our China dependant economy.
Another scenario would be houses going to moon again, in fact, they've passed the moon and are heading towards Jupiter. This would cause all kinds of problems for the economy as people will be spending all their income on housing and nothing else, businesses will go under as a result. My kids and other non homeowners will leave Australia and set up elsewhere taking their skills and education with them leaving a ton of Baby Boomers with expensive properties that they have no one to sell them to - and then prices will have to come off anyway.
Apr 9th 2010, 7:26 am
#47
Pie Eater
Thread Starter
Joined: Sep 2007
Location: South Australia
Posts: 770
Re: Interest Rates, where will they stop?
It's also a fact that Estate Agents will lower market values to shift property (they make money when property changes hands). This doesn't necessarily mean people dropping prices directly, it can simply mean that when they come to put their house on the market it goes on for less than a similar house already on the market. This creates a downward market - spooking investors in the process.
Apr 9th 2010, 9:54 am
#48
Guest
Posts: n/a
Re: Interest Rates, where will they stop?
Thanks to cheap labour in China and Asia and evolving technology, goods are ALL relatively cheaper than even 10 years ago.
My Dad had to save up a whole weeks wage to buy me a bike back in the 70's, now you can buy one in Kmart for a couple of hours of labour.
We were the only one's in our street with wall to wall carpeting at one stage, now people change their carpets every few years because they can and it's cheap.
People have more stuff because it's cheaper. If it gets even cheaper then we'll have even more stuff. If Iphones get down to $20 a piece then perhaps I'll even get one.
My Dad had to save up a whole weeks wage to buy me a bike back in the 70's, now you can buy one in Kmart for a couple of hours of labour.
We were the only one's in our street with wall to wall carpeting at one stage, now people change their carpets every few years because they can and it's cheap.
People have more stuff because it's cheaper. If it gets even cheaper then we'll have even more stuff. If Iphones get down to $20 a piece then perhaps I'll even get one.
Apr 9th 2010, 10:19 am
#50
Guest
Posts: n/a
Re: Interest Rates, where will they stop?
3 bed, 1 bath $225,000...
But you said 2 hours, this is only 1 hr 12 mins
http://www.railmaps.com.au/routedeta...RouteSelect=64
Finding somewhere that far out is difficult...
But wait... Toowoomba
2 bed, 1 bath $187,000
1hr 45 minutes by Greyhound buses
Apr 9th 2010, 10:49 pm
#51
Lost in BE Cyberspace
Joined: Oct 2005
Location: Hill overlooking the SE Melbourne suburbs
Posts: 16,622
Re: Interest Rates, where will they stop?
25 year loan at 17% interest rate and payments of £600 pcm would of meant you had a loan of about $40K back then. This would of been 2.5 times your husband's salary of $16K. (I'm persuming that the £600 a month repayments were at a time of high interest rates as you went on to explain how tough everyone was having it back then, so I can only asume 17%)
Was $16K the average wage back then? If it was, then 2.5 times the average wage in Aus now would be $65K giving you an equivilent mortgage today of $162K. Only $162K!!!!
Unfortunately, First Home Buyers are needing almost double that amount of $162K to get a home thesedays, so I can't see the 'how it was so much harder back then' story washes?
Was $16K the average wage back then? If it was, then 2.5 times the average wage in Aus now would be $65K giving you an equivilent mortgage today of $162K. Only $162K!!!!
Unfortunately, First Home Buyers are needing almost double that amount of $162K to get a home thesedays, so I can't see the 'how it was so much harder back then' story washes?
A lot of people got intro trouble in the early 90s but their loans were smaller and remember rates weren't 17pc for years. In many cases, the same people who held on, or people picking up repossessions were grinning like mad less than 10 years later.
The income multiples now are ridiculous.
Apr 9th 2010, 11:15 pm
#52
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: Interest Rates, where will they stop?
Without wishing to sound like I am taking sides, I can see where Pomtastic is coming from, and I agree with his maths and am not getting sidetracked with FX rates.
A lot of people got intro trouble in the early 90s but their loans were smaller and remember rates weren't 17pc for years. In many cases, the same people who held on, or people picking up repossessions were grinning like mad less than 10 years later.
The income multiples now are ridiculous.
A lot of people got intro trouble in the early 90s but their loans were smaller and remember rates weren't 17pc for years. In many cases, the same people who held on, or people picking up repossessions were grinning like mad less than 10 years later.
The income multiples now are ridiculous.
How did I buy a place for 6 times my income? I bought with a friend. I was fortunate that about 3 years later when he got married I was able to take on the whole mortgage (with a lodger to help out on the payments). It is also worth pointing out that although banks were offering 3.5 times salary at that time employers were willing to report your wages higher than it actually was, so people were getting mortgages at higher multiples than 3.5.
For as long as I can remember there have been people complaining that they can't buy a really nice house on their wages whilst there have been others who start at the bottom and work their way up. I remember in the early 00s when the stamp duty concession was raised to £150k people were complaining that first home buyers couldn't find a place for that in London. Yes you could. A 2 bed flat in Bermondsey, 5 mins walk, from Bermondsey tube, could be picked up for that. In Deptford you could get places even cheaper. Not everyone can start with a 3 bed in Islington. It's just people whinging. And all the more so as Generation Whine comes of age.
Apr 10th 2010, 12:12 am
#53
Pie Eater
Thread Starter
Joined: Sep 2007
Location: South Australia
Posts: 770
Re: Interest Rates, where will they stop?
They are ridiculous but they are no different to what was going on the the UK in the late 80s. I'd say it was worse in the late 80s UK than it is here and now. I bought my first flat then and it was 6 times my wage. And that was a small flat in the cheaper part of town. The theory espoused by some that it was easier back then is complete bunkum. It's as hard now as it was then. Post crashes are the only time it comes easy as it was in the early 90s UK but even then it was still hard for peeps starting from nothing as the banks became more careful with the lending during that time.
How did I buy a place for 6 times my income? I bought with a friend. I was fortunate that about 3 years later when he got married I was able to take on the whole mortgage (with a lodger to help out on the payments). It is also worth pointing out that although banks were offering 3.5 times salary at that time employers were willing to report your wages higher than it actually was, so people were getting mortgages at higher multiples than 3.5.
For as long as I can remember there have been people complaining that they can't buy a really nice house on their wages whilst there have been others who start at the bottom and work their way up. I remember in the early 00s when the stamp duty concession was raised to £150k people were complaining that first home buyers couldn't find a place for that in London. Yes you could. A 2 bed flat in Bermondsey, 5 mins walk, from Bermondsey tube, could be picked up for that. In Deptford you could get places even cheaper. Not everyone can start with a 3 bed in Islington. It's just people whinging. And all the more so as Generation Whine comes of age.
How did I buy a place for 6 times my income? I bought with a friend. I was fortunate that about 3 years later when he got married I was able to take on the whole mortgage (with a lodger to help out on the payments). It is also worth pointing out that although banks were offering 3.5 times salary at that time employers were willing to report your wages higher than it actually was, so people were getting mortgages at higher multiples than 3.5.
For as long as I can remember there have been people complaining that they can't buy a really nice house on their wages whilst there have been others who start at the bottom and work their way up. I remember in the early 00s when the stamp duty concession was raised to £150k people were complaining that first home buyers couldn't find a place for that in London. Yes you could. A 2 bed flat in Bermondsey, 5 mins walk, from Bermondsey tube, could be picked up for that. In Deptford you could get places even cheaper. Not everyone can start with a 3 bed in Islington. It's just people whinging. And all the more so as Generation Whine comes of age.
Apr 10th 2010, 12:23 am
#54
Proudly Deplorable
Joined: May 2003
Location: Alloha snack bar
Posts: 24,246
Re: Interest Rates, where will they stop?
I don't mind you comparing Australian cities to London (rather than the likes of Manchester or Liverpool), but the wages should then be compared to London too and from what I've experienced, though wages are good in Australia (compared to my northern origins) they are no where near to the equivalent in London.
Apr 10th 2010, 1:28 am
#55
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: Interest Rates, where will they stop?
I don't mind you comparing Australian cities to London (rather than the likes of Manchester or Liverpool), but the wages should then be compared to London too and from what I've experienced, though wages are good in Australia (compared to my northern origins) they are no where near to the equivalent in London.
Last edited by MartinLuther; Apr 10th 2010 at 1:32 am.
Apr 10th 2010, 2:43 am
#56
Retired
Joined: Apr 2004
Posts: 34,649
Re: Interest Rates, where will they stop?
It's also a fact that Estate Agents will lower market values to shift property
Apr 10th 2010, 2:59 am
#58
Lost in BE Cyberspace
Joined: Oct 2005
Location: Hill overlooking the SE Melbourne suburbs
Posts: 16,622
Re: Interest Rates, where will they stop?
They are ridiculous but they are no different to what was going on the the UK in the late 80s. I'd say it was worse in the late 80s UK than it is here and now. I bought my first flat then and it was 6 times my wage. And that was a small flat in the cheaper part of town. The theory espoused by some that it was easier back then is complete bunkum. It's as hard now as it was then. Post crashes are the only time it comes easy as it was in the early 90s UK but even then it was still hard for peeps starting from nothing as the banks became more careful with the lending during that time.
How did I buy a place for 6 times my income? I bought with a friend. I was fortunate that about 3 years later when he got married I was able to take on the whole mortgage (with a lodger to help out on the payments). It is also worth pointing out that although banks were offering 3.5 times salary at that time employers were willing to report your wages higher than it actually was, so people were getting mortgages at higher multiples than 3.5.
For as long as I can remember there have been people complaining that they can't buy a really nice house on their wages whilst there have been others who start at the bottom and work their way up. I remember in the early 00s when the stamp duty concession was raised to £150k people were complaining that first home buyers couldn't find a place for that in London. Yes you could. A 2 bed flat in Bermondsey, 5 mins walk, from Bermondsey tube, could be picked up for that. In Deptford you could get places even cheaper. Not everyone can start with a 3 bed in Islington. It's just people whinging. And all the more so as Generation Whine comes of age.
How did I buy a place for 6 times my income? I bought with a friend. I was fortunate that about 3 years later when he got married I was able to take on the whole mortgage (with a lodger to help out on the payments). It is also worth pointing out that although banks were offering 3.5 times salary at that time employers were willing to report your wages higher than it actually was, so people were getting mortgages at higher multiples than 3.5.
For as long as I can remember there have been people complaining that they can't buy a really nice house on their wages whilst there have been others who start at the bottom and work their way up. I remember in the early 00s when the stamp duty concession was raised to £150k people were complaining that first home buyers couldn't find a place for that in London. Yes you could. A 2 bed flat in Bermondsey, 5 mins walk, from Bermondsey tube, could be picked up for that. In Deptford you could get places even cheaper. Not everyone can start with a 3 bed in Islington. It's just people whinging. And all the more so as Generation Whine comes of age.