pomtastic

Eugene43, I know it's boring in Perth and there's sweet FA on telly but hitting the bottle isn't going to help.

Anyway, the investors and mortgaged up to the hilt folk have tried to derail this thread. If you don't give a shit about house prices in Australia then I suggest you 'ignore' this thread - simple, eh?!

For those who are intersted:

"Bubble Risk, rates set to Rise, says RBA"

eugene43

sod

eugene43

off

ABCDiamond

Or to be exact...
Interest rates are set to continue rising towards more normal levels

Hopefully everyone realises this, unless they don't watch TV, don't read newspapers, have head in sand.

An interesting poll that the article refers to:

523 were asked "Do you think Australia has a property bubble"

1. 99 people said "Yes, we have been in a bubble since 2000"
2. 214 said "Yes, we have a bubble growing now"
3. 188 said "No, we have a housing shortage"
4. 21 said "No"

Option 3 still has me puzzled, with over one third saying "No bubble as we have a housing shortage".

freebo

Historically normal maybe, but not "normal" for the flood of FTB's sucked into the market by homeowner grants and "abnormally" low rates. What was the average debt burden over that historical period? Nothing like it is now I'd imagine.

ABCDiamond

The few FHB, that I know, all realise that rates have to return to normal. Maybe I don't mix with the ones who don't open their eyes and ears ?

The word "normal" is a very difficult word to define, after all even FHB are returning to normal levels now, as per this graph.. (from Steve Keen’s Debtwatch Analysing the Global Debt Bubble)


In about 2002 the numbers of FHB dropped, but appears to have recently risen back to "normal" levels. It is a bit high at the last point on the graph, but that is probably dropping down again, now that the investors are moving back into the market..

You ask about the average debt burdens:

In 20 years the mortgage burden has increased by 42% for the average home.
But the average home in 20 years has also changed from a 3 bed basic house to something much bigger and better.
That is peoples choice coming into the equation.
Tax deductions on the average wages has also dropped about 6% in that period.

freebo

"Money Madness in Australia" Writes Mish Schedlock

Some deposit rates higher than mortgage rates

http://globaleconomicanalysis.blogsp...nd+Analysis%29

"This is likely to backfire when the Aussie credit bubble bursts during the next deflationary downturn, as real estate and commodities prices again fall and loans go bad, requiring Aussie banks to increase or maintain reserves against those deposits."

ABCDiamond

The story says:

• The average term deposit rate now is 5.93 per cent
• Term deposits now yielding far more than mortgage rates

These current high rate term deposits, will not be looking as good when the normal rates have increased. The banks may have calculated the benefit to them of these rates taking into account the full term of the deposit.

In 3 months time that 5.93% will not be looking very good.

freebo

And who knows, in 3 months time the term deposits on offer at that time may have risen along with the base rate.

ABCDiamond

That we will have to see, but the article quoted does not indicate this, by stating "But it's been interesting to see over the last two to three weeks it has moderated somewhat". This seems to indicate it may be over sooner than it gets noticed.

My guess is that term deposit rates will generally rise and fall in line with fixed term mortgage rates to some degree.

Variable mortgage rates are currently rising faster than fixed rates, as the fixed rates did their increases earlier on.
To me this seems very much the same.

ozzieeagle

Just learnt on the TV that one of the Auctions in Melbourne yesterday, ended up being held in Chinese. They broadcasted a phone call to ABC radio today from someone in attendance at a house Auction in the Eastern burbs.

The Chinese are really driving the house prices up to a huge degree in Melbourne.

coolshadows

"Apparently, 1 in 5 people in the world are Chinese. And there are 5 people in my family, so it must be one of them. It's either my mum or my dad. Or my older brother Colin. Or my younger brother Ho-Cha-Chu. But I think it's Colin."

gmralston

I just watched that myself on ch 9 news, half the auction held in Chinese. They where only expecting about $1 mil for that house and ended up getting over $2 mil.

kporte

Ah, bless Tommy Cooper!

Lyx

lol...lol....lol..... ....still laughing here