mydearboy1

Hi all another Newbie here…So. Hello…to everyone..

I have just started the process (applied for job interview, applied for state registration etc) and am about to apply for a visa (PR).

My first question is..

I am really concerned about the interest rates, they appear sky high at the moment and I believe they are rising. So is this just a blip? (as with the rest of the world) Are they likely to come down again in the next few years? And lastly what is the average rate over the past say 5 odd years, it has been roughly 5.5 here in the UK.

Hope to hear from you all, and expect many questions over the next few months.
Thanks
Darren

longreach

You can find stats here... http://www.rba.gov.au/Statistics/Alp...listing_i.html

We are still in a period of upward pressure on interest rates. Language coming out of the RBA indicates at least 1 more increase in the very near future.

geordie downunder

This is a blip,far from being sky high interest are low.The highest I recall was under Fraser/Howard,they hit 22-23%,however they did have a cap on mortgage rates at around 13% I think.

Then Hawke/Keating took interest rates up to 18-19%,they tried the same trick,a cap on rates at around 12.5%,I think that came in Oct 85 or 86.Anyone with a mortgage after that date paid market rates.

The last 5 yrs would be no help,they have been the lowest interest rates for all of my life.Should this be peak oil then the last big oil shock of early to mid 70.s produced very high interest rates and inflation.We may be at the start of a re-run of that period,we may not,time will tell.

During that oil shock in the 70,s we had a pay rise of about 30p every month due to a prices and incomes policy.We had a rise,prices went up,we had a rise prices went up,like a dog chasing it's tail the rises never caught up with inflation.The rises kept forcing inflation higher,I think it hit 25% at one stage.This brought about J Callaghan's speech of one man's pay rise is another mans price rise,a very true statement.

The futurists at the time (Alvin Tofler ,Future shock) were predicting doom and gloom,true or not.The working man at the time was dreaming of high wages by the year 2000,a life of leisure as robots did most of the work and western countries would have sky high GDP to afford all of this,due to the robots being able to work 24/7/365 with no rest.Didn't really happen did it.

The future will be the future,the media will be as much full of silly predictions as they were in the 60,s and 70,s.You'll just have to take your chance.

mydearboy1

That is extremely Bad news for me, i am now going to seriously consider not going through with the move.

It is ridiculous i could not afford a house on current interest rates never mind further increases. Sounds like the situation like in the uk in the 80's. I am now very sad

I could not give up owning my home here to never being able to afford 1 there!

longreach

You can always fix the rate!

Stephen

You can also go interest only for a time...say a couple of years then revert to repayment automatically, which would ease the burden in the early years. It's not for everyone but I have fixed loans up this way for some in the past.

It's hard to call which way rates will go.

On 6th May the RBA Governor said....

As a result of the Boardís earlier decisions, additional rises in market interest rates and tougher credit standards for some borrowers, there has been a substantial tightening in financial conditions since the middle of last year. Conditions in international financial markets, though improved in recent weeks, also remain difficult. These factors are acting to restrain demand.

The rise in Australiaís terms of trade currently occurring, which is larger than had been expected a couple of months ago, will work in the opposite direction. It will add substantially to national income and ability to spend, even with the slowing in global growth to below trend pace that the Bank has been assuming for some months now.

Given the opposing forces at work, considerable uncertainty remains about the outlook for demand and inflation. On balance, the Boardís current assessment is that demand growth will remain moderate this year. In the short term, inflation is likely to remain relatively high, but it should decline over time provided demand evolves as expected. Should demand not slow as expected or should expectations of high ongoing inflation begin to affect wage and price setting, that outlook would need to be reviewed.

What they are saying, in my opinion, is that as long as they keep rates high, they expect that this will kill demand and inflation, allowing them to bring rates down, but until then.........


Couple of more stats for you if your interested....

Average Loan Size

The average loan size rose from $230,100 to $233,500. Average loans in each state/territory were: NSW, $251,400; Vic, $225,100; Qld $239,600; SA, $187,300; WA, $238,900; Tas, $169,300; NT, $200,000; ACT $240,000

Fixed Rate Loans >2 years

Fixed rate loans were 23.9% of all owner occupier loans, up from 23.6% in February.

Consumer Price Index
Year to March 2008: +4.2% Retail Sales
Australian retail sales in March 2008 were up by 3.0% on March 2007 (original figures) and the trend estimate for March 2008 showed a 0.2% increase on February. Unemployment Rate
Source: ABS
The unemployment rate (seasonally adjusted) for April 2008 was 4.2%, up from 4.1% in March.

mydearboy1

Not really an option

At current interest rates in Oz it would double my mortgage!!!

mydearboy1

Thanks for the info stephen

I am going to have to think long and hard about this and keep an eye on the market. But it is looking doubtfull for me now. Think my rose tinted glasses are finaly off!!

stariston

Seems a lot of people are sitting on the fence at the moment
as regards committing to purchase due to the threat of further
hikes in interest rates if you can wait 12 or 18 months to see the
lay of the land i think big price corrections in Australia
will happen

some people will tell you its BOOMING well the job markets strong
but some people will tell you its booming even when its not for some
strange reason ?

mydearboy1

"Bump"
Thanks everyone for your comments good food for thought!
Anyone else with some info/comments.

Stephen

Be carefull of how sharp that fence is

With building inflation, land inflation and rent increases, it might just be a good idea to put it all down on paper and work out the sums.