Debt binge may lead more home borrowers into trouble
Oct 14th 2003, 1:32 am
#1
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Debt binge may lead more home borrowers into trouble
http://www.smh.com.au/articles/2003/...917352748.html
This is dependant on interest rates changes which economists are mixed about.
One in four home borrowers would struggle to make repayments if interest rates edge up just 1 percentage point, a Hawker-Britton UMR poll of 1000 people taken between September 23-28 showed. In June last year the survey found only 15 per cent would be troubled by a rise of that magnitude.
A 2 percentage point hike in rates would leave 44 per cent of respondents in trouble, up from 32 per cent in June 2002. Almost three-quarters said a 3 percentage point rate hike would cause trouble, up from 48 per cent 15 months ago.
Bruce Hawker, the managing director of public affairs firm Hawker Britton, said: "The result shows that vulnerability to rate rises is climbing in a property market that has stretched affordability and driven household debt to record levels."
Economists said yesterday a rate rise had become more likely after Bureau of Statistics figures revealed all categories of debt rose strongly in August
This is dependant on interest rates changes which economists are mixed about.
One in four home borrowers would struggle to make repayments if interest rates edge up just 1 percentage point, a Hawker-Britton UMR poll of 1000 people taken between September 23-28 showed. In June last year the survey found only 15 per cent would be troubled by a rise of that magnitude.
A 2 percentage point hike in rates would leave 44 per cent of respondents in trouble, up from 32 per cent in June 2002. Almost three-quarters said a 3 percentage point rate hike would cause trouble, up from 48 per cent 15 months ago.
Bruce Hawker, the managing director of public affairs firm Hawker Britton, said: "The result shows that vulnerability to rate rises is climbing in a property market that has stretched affordability and driven household debt to record levels."
Economists said yesterday a rate rise had become more likely after Bureau of Statistics figures revealed all categories of debt rose strongly in August
Oct 14th 2003, 1:44 am
#2
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Waiting ..... waiting ...... waiting ......... 
Oct 14th 2003, 1:56 am
#3
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Originally posted by MrsDagboy
Waiting ..... waiting ...... waiting .........
Waiting ..... waiting ...... waiting .........
With an interest rate change the market will change rapidly. It has happened in the past.
Inflation and the high dollar make a rate rise less likely. The rise in property will eventually have an inflationary impact.
Oct 14th 2003, 2:03 am
#4
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Re: Debt binge may lead more home borrowers into trouble
Originally posted by bondipom
http://www.smh.com.au/articles/2003/...917352748.html
This is dependant on interest rates changes which economists are mixed about.
One in four home borrowers would struggle to make repayments if interest rates edge up just 1 percentage point, a Hawker-Britton UMR poll of 1000 people taken between September 23-28 showed. In June last year the survey found only 15 per cent would be troubled by a rise of that magnitude.
A 2 percentage point hike in rates would leave 44 per cent of respondents in trouble, up from 32 per cent in June 2002. Almost three-quarters said a 3 percentage point rate hike would cause trouble, up from 48 per cent 15 months ago.
Bruce Hawker, the managing director of public affairs firm Hawker Britton, said: "The result shows that vulnerability to rate rises is climbing in a property market that has stretched affordability and driven household debt to record levels."
Economists said yesterday a rate rise had become more likely after Bureau of Statistics figures revealed all categories of debt rose strongly in August
http://www.smh.com.au/articles/2003/...917352748.html
This is dependant on interest rates changes which economists are mixed about.
One in four home borrowers would struggle to make repayments if interest rates edge up just 1 percentage point, a Hawker-Britton UMR poll of 1000 people taken between September 23-28 showed. In June last year the survey found only 15 per cent would be troubled by a rise of that magnitude.
A 2 percentage point hike in rates would leave 44 per cent of respondents in trouble, up from 32 per cent in June 2002. Almost three-quarters said a 3 percentage point rate hike would cause trouble, up from 48 per cent 15 months ago.
Bruce Hawker, the managing director of public affairs firm Hawker Britton, said: "The result shows that vulnerability to rate rises is climbing in a property market that has stretched affordability and driven household debt to record levels."
Economists said yesterday a rate rise had become more likely after Bureau of Statistics figures revealed all categories of debt rose strongly in August
There are going to be a few people in trouble if interest rates shoot up.. bloke in work with me now, it's all he can do is to pay his mortgage and put food on the table.. no social life - he can't afford it. Personally I feel thatt the banks really should be pulled up by the government for the amount they lend some people.
Cheers
Oct 14th 2003, 2:25 am
#5
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Originally posted by bondipom
My line is that it depends in interest rates. Without an interest rate change not much will happen.
My line is that it depends in interest rates. Without an interest rate change not much will happen.
The interst rate rises dont only affect the people who have already borrowed, but those still trying to buy for the first time, like yourself. For those on a lower income a couple of percentage points rise on todays prices will effectively kill first home buyers chances of getting into the market. That will have a snowball effect on the market, slowing it down considerably as people higher up the ladder wont be able to sell because the people with cheaper houses wont be moving up. Even if prices dont fall a great deal at first it will still mean a better market for buyers where you will be able to bargain a little on the price rather than just paying through the nose just to secure a property the way it is now. But the interest rates have to move first.
My 1st house contract becomes unconditional today, still waiting for that too!
Oct 14th 2003, 2:29 am
#6
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Re: Debt binge may lead more home borrowers into trouble
Originally posted by Ceri
Yip I know a few people who would be in real trouble... borrowed to their maximium, why the banks lend out so much I never know (well I do know.. but they should be had up for it). You wouldn't believe what the bank offered us .. absouletly no way we would be able to pay them back if and when interest rates go up. If we had borrowed what they offered we'd be sitting in one of the houses on the Gold coast canal (million dollar homes). As it is we bought with our own money a house we could afford, we didn't borrow. I hate debt.
There are going to be a few people in trouble if interest rates shoot up.. bloke in work with me now, it's all he can do is to pay his mortgage and put food on the table.. no social life - he can't afford it. Personally I feel thatt the banks really should be pulled up by the government for the amount they lend some people.
Cheers
Yip I know a few people who would be in real trouble... borrowed to their maximium, why the banks lend out so much I never know (well I do know.. but they should be had up for it). You wouldn't believe what the bank offered us .. absouletly no way we would be able to pay them back if and when interest rates go up. If we had borrowed what they offered we'd be sitting in one of the houses on the Gold coast canal (million dollar homes). As it is we bought with our own money a house we could afford, we didn't borrow. I hate debt.
There are going to be a few people in trouble if interest rates shoot up.. bloke in work with me now, it's all he can do is to pay his mortgage and put food on the table.. no social life - he can't afford it. Personally I feel thatt the banks really should be pulled up by the government for the amount they lend some people.
Cheers
But agree totally Banks offer too much money, even if you dont want it! Our bank manager rings us for "Investment nights" all the time, I tell them as rudely as I can to basically bog off and they still wont take no for an answer. I also dont like the grovelling they do, bottles of wine, leather Xmas gifts, silk lined casks of vintage plonk was quite tasty tho
and the smarmy Oh good morning Mrs *#>**, when you quite plainly just want to bank a couple of cheques. Urrgh. Credit card companies are just as bad, we can offer you a Platinum card for a mere fee of $900 a year!! Yeah right, my brain is in my ass. Maybe all countries are the same, I dont know but its pretty sad the way they carry on here.
Oct 14th 2003, 2:42 am
#7
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Re: Debt binge may lead more home borrowers into trouble
Originally posted by dotty
Banks are coming a bit unstuck now tho, people have smartened up, they have taken on loans and now all the govvy scare tactics tell them interest rates may rise so all they do is fix the rate so they are not affected. You can still fix at 6.5% or so a bankie mate of ours claims. Dont know myself, like Ceri have only ever bought what we can afford through hard work.
But agree totally Banks offer too much money, even if you dont want it! Our bank manager rings us for "Investment nights" all the time, I tell them as rudely as I can to basically bog off and they still wont take no for an answer. I also dont like the grovelling they do, bottles of wine, leather Xmas gifts, silk lined casks of vintage plonk was quite tasty tho and the smarmy Oh good morning Mrs *#>**, when you quite plainly just want to bank a couple of cheques. Urrgh. Credit card companies are just as bad, we can offer you a Platinum card for a mere fee of $900 a year!! Yeah right, my brain is in my ass. Maybe all countries are the same, I dont know but its pretty sad the way they carry on here.
Banks are coming a bit unstuck now tho, people have smartened up, they have taken on loans and now all the govvy scare tactics tell them interest rates may rise so all they do is fix the rate so they are not affected. You can still fix at 6.5% or so a bankie mate of ours claims. Dont know myself, like Ceri have only ever bought what we can afford through hard work.
But agree totally Banks offer too much money, even if you dont want it! Our bank manager rings us for "Investment nights" all the time, I tell them as rudely as I can to basically bog off and they still wont take no for an answer. I also dont like the grovelling they do, bottles of wine, leather Xmas gifts, silk lined casks of vintage plonk was quite tasty tho
and the smarmy Oh good morning Mrs *#>**, when you quite plainly just want to bank a couple of cheques. Urrgh. Credit card companies are just as bad, we can offer you a Platinum card for a mere fee of $900 a year!! Yeah right, my brain is in my ass. Maybe all countries are the same, I dont know but its pretty sad the way they carry on here.
Got to seriously reconsider who we bank with, what do you think the chances are that they arent as incompetant with our money
Oct 14th 2003, 2:55 am
#8
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My accountant has a interesting theory, if and when the first few
.25% rates rises hit, there will be a surge of buyers, those who realise they can get in and fix before anything bigger happens, like before the GSt every man and his dog wanted to buy. Quite a few financial articles point to it too, 2004 yet another round of property price hikes. 2006/2007 interest rates expected to climb upwards, property prices to stabilise and possible fall in areas of oversupply. Watch Johnnie H too, those rates aint going too far just yet with an Election looming! Pity really think of the dollar when they do.
.25% rates rises hit, there will be a surge of buyers, those who realise they can get in and fix before anything bigger happens, like before the GSt every man and his dog wanted to buy. Quite a few financial articles point to it too, 2004 yet another round of property price hikes. 2006/2007 interest rates expected to climb upwards, property prices to stabilise and possible fall in areas of oversupply. Watch Johnnie H too, those rates aint going too far just yet with an Election looming! Pity really think of the dollar when they do.
Oct 14th 2003, 2:57 am
#9
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Joined: Aug 2003
Posts: 11,149
Originally posted by dotty
My accountant has a interesting theory, if and when the first few
.25% rates rises hit, there will be a surge of buyers, those who realise they can get in and fix before anything bigger happens, like before the GSt every man and his dog wanted to buy. Quite a few financial articles point to it too, 2004 yet another round of property price hikes. 2006/2007 interest rates expected to climb upwards, property prices to stabilise and possible fall in areas of oversupply. Watch Johnnie H too, those rates aint going too far just yet with an Election looming! Pity really think of the dollar when they do.
My accountant has a interesting theory, if and when the first few
.25% rates rises hit, there will be a surge of buyers, those who realise they can get in and fix before anything bigger happens, like before the GSt every man and his dog wanted to buy. Quite a few financial articles point to it too, 2004 yet another round of property price hikes. 2006/2007 interest rates expected to climb upwards, property prices to stabilise and possible fall in areas of oversupply. Watch Johnnie H too, those rates aint going too far just yet with an Election looming! Pity really think of the dollar when they do.
Oct 14th 2003, 10:14 am
#10
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i don't know about the future, but personally i don't think i'll be able to afford a house NOW on the money i'll be earning and that's with me taking $120K along for the ride! God knows what it will all be like in a years time.
Homes for first time buyer are being listed from $250K+ in canberra and i can only afford an $100K mortgage and $100K investment. so that's me out of the game already! It would be easier with two incomes coming in, but i can't see that happening for quite a while.
Fingers crossed that it all goes tits up before i get there and the prices come crashing down. (i know heartless 
)
Leigh
Homes for first time buyer are being listed from $250K+ in canberra and i can only afford an $100K mortgage and $100K investment. so that's me out of the game already! It would be easier with two incomes coming in, but i can't see that happening for quite a while.
Fingers crossed that it all goes tits up before i get there and the prices come crashing down.
(i know heartless )Leigh
Oct 14th 2003, 10:21 am
#11
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Originally posted by scutterUK
i don't know about the future, but personally i don't think i'll be able to afford a house NOW on the money i'll be earning and that's with me taking $120K along for the ride! God knows what it will all be like in a years time.
Homes for first time buyer are being listed from $250K+ in canberra and i can only afford an $100K mortgage and $100K investment. so that's me out of the game already! It would be easier with two incomes coming in, but i can't see that happening for quite a while.
Fingers crossed that it all goes tits up before i get there and the prices come crashing down. (i know heartless )
Leigh
i don't know about the future, but personally i don't think i'll be able to afford a house NOW on the money i'll be earning and that's with me taking $120K along for the ride! God knows what it will all be like in a years time.
Homes for first time buyer are being listed from $250K+ in canberra and i can only afford an $100K mortgage and $100K investment. so that's me out of the game already! It would be easier with two incomes coming in, but i can't see that happening for quite a while.
Fingers crossed that it all goes tits up before i get there and the prices come crashing down.
(i know heartless )Leigh
Cheers Kev.
