BadgeIsBack

Yes - the sizeable deposit for a Australian home. I lived in it for 6 months then rented it out.

I remember feeling a bit miserable in 2000 wondering if I had done the right thing. A local in a pub told me it was a bad move. I bought there as it was close to my SW London base - well a fraction too far away. I could have borrowed a lot more and gone for a slightly swankier area - read - a gritty area, but a more interesting one. The crazy thing is, there were other areas that I did not consider and should have. With hindsight I might have ended up over your neck of the woods perhaps - my wife to be was working in Deptford..

coolshadows

Interest rates headed for 10 per cent

ABCDiamond

My guess is that the banks would trim their margins back to normal levels if they hit those rates.

The last time it was 7.25% was Mar 2008, with most bank standard variable rates at 9.35%

coolshadows

Looks like there's going to be two quick hikes of 25pts in the next couple of months, taking the standard rate to 4.75.

PRICE hikes for iron ore and coal that were stronger than expected are encouraging the Reserve Bank of Australia to raise interest rates

The RBA appears concerned that the mining sector is BOOMing too much and they want to bring it in.

coolshadows

I'm not sure this will be possible as more than 50% of bank lending is raised in the global market. This global market is expected to see significant increases to the cost of lending due to new regulation.

I think this is the reason banks here are trying to get more deposits from savers.

coolshadows

I think it's looking more and more likely that the standard rate will head towards 6%, sooner rather than later.

The RBA is now under tremendous pressure to reduce the BOOMing economy before it blows out.

http://www.theaustralian.com.au/busi...rom=public_rss

even accountants are on the move...
http://bigpondnews.com/articles/Busi...gh_453436.html

Me thinks - perhaps the stimulus package is doing more damage than good?

ABCDiamond

5% ??

RBA Minutes:

coolshadows

I'd kinda agree but growth is now expected to go above trend, so I can only assume so will the RBA rate.

I can't imagine 25pt or even a 75pt having much effect.

economic-growth-to-accelerate-above-trend-in-2010

ABCDiamond

The scary things is looking back at Mortgage rates:

Deancm

And in the late eighties, early nineties interest rates were up around the 18% mark.

ABCDiamond

I had a mortgage back then, taken out in 1991 at about 15%, on a $100k loan. Average wage was $31,200

Monthly repayment $1,280 or 49% of single gross wage, for a 3 bed house.
Same house today is $375,000 at 8% = $2,894 pm or 52% of single wage.

Now that was unexpected ! I'll check the figures later, as even I am a bit surprised.

coolshadows

soaring-house-prices-strengthens-case-for-rba-to-lift-interest-rates

This is really starting to look like being a roller-coaster ride.

ABCDiamond

And depending where the property is, your position on the roller coaster may be very different...

Darwin has had the largest annualised growth over the last 5 years at 14.2% average per year, with Sydney being the slowest, rising at only 2.21% average per year.

The interesting thing with Sydney being, that prices have risen by only 11.5% in total over the last 5 years, but 21.0% was in the last 12 months.

And in 2005 Brisbane was the 3rd most expensive city, out of 8, but is now down to position 6, with only Adelaide and Hobart being cheaper.

In 2005 Sydney was 30% higher than the next most expensive City, but is now in 2nd place !

Based on ABS 6416.0 – Established House Price Indexes: Eight Capital Cities, Mar 2010

0.25% rise tomorrow ?

DownUnderPaddy

...and indeed, .25% it is ;-)

wilf70

Would they dare risk0.5 to hammer home the point before the whole edifice collapses in ruins???----just a passing thought.Will probably have to go up that much in the next few months.