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Post by DropBear on Jun 7, 2022 13:28:00 GMT 8
For those that hadn't heard the RBA raised the cash rate today by 0.5% to 0.85%.
Theres going to be some hurt out there.
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Post by FatPom on Jun 7, 2022 14:39:09 GMT 8
For those that hadn't heard the RBA raised the cash rate today by 0.5% to 0.85%. Theres going to be some hurt out there. Over here we've had 5 increases in less than a year, I think it's added up to a 1,1% increase so far. |
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chris
Full Member
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Post by chris on Jun 7, 2022 20:45:40 GMT 8
For those that hadn't heard the RBA raised the cash rate today by 0.5% to 0.85%. Theres going to be some hurt out there. Over here we've had 5 increases in less than a year, I think it's added up to a 1,1% increase so far. It’s a .5% increase seriously, it’s off the lowest of lows and still the lowest of lows It the media now trying to cause a recession |
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Post by DropBear on Jun 8, 2022 6:03:52 GMT 8
Over here we've had 5 increases in less than a year, I think it's added up to a 1,1% increase so far. It’s a .5% increase seriously, it’s off the lowest of lows and still the lowest of lows Historically rates may be the lowest ever but correspondingly the mortgage amounts are the highest ever. The number that is really important is the Repayments as a Percentage of Gross income. The higher the number the more pain you're probably in. So impact of this rise would depend on how much your mortgage is and whos actually paying for it. If you've got a reasonably low mortgage on an investment property then you're probably not too concerned about it. If you're a middle income owner/occupier in Sydney with a average mortgage, you've now got to find $500+ a month (Based on the average Sydney owner occupier loan of $800K) on top of your existing mortgage repayments than you did at the start of May. Based on those numbers I would be "Mortgage stress" territory (Repayments > 30% of gross income). Obviously those who started closer to the edge are going to start feel the pain now. |
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Post by kenkong on Jun 8, 2022 8:49:13 GMT 8
It’s a .5% increase seriously, it’s off the lowest of lows and still the lowest of lows Historically rates may be the lowest ever but correspondingly the mortgage amounts are the highest ever. The number that is really important is the Repayments as a Percentage of Gross income. The higher the number the more pain you're probably in. So impact of this rise would depend on how much your mortgage is and whos actually paying for it. If you've got a reasonably low mortgage on an investment property then you're probably not too concerned about it. If you're a middle income owner/occupier in Sydney with a average mortgage, you've now got to find $500+ a month (Based on the average Sydney owner occupier loan of $800K) on top of your existing mortgage repayments than you did at the start of May. Based on those numbers I would be "Mortgage stress" territory (Repayments > 30% of gross income). Obviously those who started closer to the edge are going to start feel the pain now. Anyone who took out a massive loan not factoring in totally expected rate rises gets zero sympathy from me. Or did they think rates would stay this low for 30 years? Greed and stupidity... |
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Post by prince on Jun 8, 2022 9:35:33 GMT 8
apparently its the previous governments fault as is the energy crisis.....
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Post by DropBear on Jun 8, 2022 10:06:48 GMT 8
Anyone who took out a massive loan not factoring in totally expected rate rises gets zero sympathy from me. Or did they think rates would stay this low for 30 years? Greed and stupidity... They don't get a lot of sympathy from me either. And I'm sure people will blame everybody but themselves for the position that they find themselves in. My youngest son was looking into buying a place late last year and after looking at one of those "How much can I afford to borrow" websites came to ask our opinion. We ran him through the figures based on the mortgage rate of 2.5% and then ran through them again at a range of percentage rates up to 10%. Yes he could pay off the mortgage at 2.5% but once it got to 5% he was struggling and at 6% was no chance of paying it off. Right now he's very grateful we talked him out of it. |
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Post by Peter on Jun 8, 2022 18:57:47 GMT 8
For those that hadn't heard the RBA raised the cash rate today by 0.5% to 0.85%. Theres going to be some hurt out there. If people are hurting they don’t deserve a home. it you aren’t prepared for it to go up at least 4% over the next few years then you were delusional when you bought your home. |
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Post by Peter on Jun 8, 2022 19:00:37 GMT 8
apparently its the previous governments fault as is the energy crisis..... Well it is. You can’t blame a government that hasn’t even got up to speed with what the previous government has known for 10 years. I give labor 12months before its a Labor party issue. ceos can turn companies aren’t in 12 months. albo has 12 months to fix the liberal mess. |
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Post by prince on Jun 9, 2022 1:00:38 GMT 8
apparently its the previous governments fault as is the energy crisis..... Well it is. You can’t blame a government that hasn’t even got up to speed with what the previous government has known for 10 years. I give labor 12months before its a Labor party issue. ceos can turn companies aren’t in 12 months. albo has 12 months to fix the liberal mess. But no one saw a war in Europe which is the reason why we are paying more Secondly, Labor are reopening previous shut down coal fire stations How is that sitting with their emission targets. They are party that got on an promises to Lower energy prices so sorry they don’t get to then say they can’t do it because the previous government left things in such a mess. |
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Post by comfortablynumb on Jun 9, 2022 4:57:56 GMT 8
For those that hadn't heard the RBA raised the cash rate today by 0.5% to 0.85%. Theres going to be some hurt out there. If people are hurting they don’t deserve a home. it you aren’t prepared for it to go up at least 4% over the next few years then you were delusional when you bought your home. Agree, we factor in interest rates of up to 8-10% in our calcs. About to withdraw an offer on an investment property which we could also use for holidays as further research revealed problems & mangt issues. Going to bide our time for a year or so and see if interest rate carnage will put us in a better position to buy.....or we can just travel, pay for accomm. and someone else can have the holiday property headaches. |
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Post by DropBear on Jun 9, 2022 5:55:57 GMT 8
But no one saw a war in Europe which is the reason why we are paying more Say What? Blind Freddy could see it was coming. Russia has been threatening to invade the Ukraine since 2014. They started with Crimea in 2014 and have been threatening the rest of the country ever since. |
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Post by IronJimbo on Jun 9, 2022 6:44:24 GMT 8
apparently its the previous governments fault as is the energy crisis..... According to Jim Chalmers it is also the previous government's fault that rates were low in the first place It's all good though. Albo assured us that his government is going to take full reshponshibility, not like Schott Morrishon... |
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Post by FatPom on Jun 10, 2022 5:38:40 GMT 8
Anyone who took out a massive loan not factoring in totally expected rate rises gets zero sympathy from me. Or did they think rates would stay this low for 30 years? Greed and stupidity... They don't get a lot of sympathy from me either. And I'm sure people will blame everybody but themselves for the position that they find themselves in. My youngest son was looking into buying a place late last year and after looking at one of those "How much can I afford to borrow" websites came to ask our opinion. We ran him through the figures based on the mortgage rate of 2.5% and then ran through them again at a range of percentage rates up to 10%. Yes he could pay off the mortgage at 2.5% but once it got to 5% he was struggling and at 6% was no chance of paying it off. Right now he's very grateful we talked him out of it. Most banks here stress test at between 6-8% here. I've only got a very small amount t go, so avoiding early settlement fees is way more important to me than the actual interest rate. |
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Post by DropBear on Jun 10, 2022 6:13:36 GMT 8
Most banks here stress test at between 6-8% here. I've only got a very small amount t go, so avoiding early settlement fees is way more important to me than the actual interest rate. I was told last year by my mortgage broker that in Australia the stress test level is current rate + 3%. So for me that made the stress test point around 6%. Having absolutely zero confidence in the "expert" predictions about where rates were going, we did our own checks in the 10%-15% ranges. Probably overkill but it at least gives us an idea in advance where our pain point is. For us it'll be about 13%. |
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Post by comfortablynumb on Jun 10, 2022 9:17:17 GMT 8
Most banks here stress test at between 6-8% here. I've only got a very small amount t go, so avoiding early settlement fees is way more important to me than the actual interest rate. I was told last year by my mortgage broker that in Australia the stress test level is current rate + 3%. So for me that made the stress test point around 6%. Having absolutely zero confidence in the "expert" predictions about where rates were going, we did our own checks in the 10%-15% ranges. Probably overkill but it at least gives us an idea in advance where our pain point is. For us it'll be about 13%. FP do you get hit with penalties if you pay out your home loan early? We've decided bollocks to investment properties, at least for the next few years. Just invest the $'s and use the earnings for holidays in someone else's place. They can have the stress of holiday rentals, which we've decided are possibly the worst RE investment you can make. |
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Post by DropBear on Jun 10, 2022 14:19:36 GMT 8
I was told last year by my mortgage broker that in Australia the stress test level is current rate + 3%. So for me that made the stress test point around 6%. Having absolutely zero confidence in the "expert" predictions about where rates were going, we did our own checks in the 10%-15% ranges. Probably overkill but it at least gives us an idea in advance where our pain point is. For us it'll be about 13%. FP do you get hit with penalties if you pay out your home loan early? Still have them here too. Was a big thing to put them on fixed interest rate loans when the interest rate was going down so that they encouraged the punters into staying and paying a higher interest rate. Often the fee was so high that leaving cost more in the long run than staying. |
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Post by FatPom on Jun 11, 2022 6:42:57 GMT 8
I was told last year by my mortgage broker that in Australia the stress test level is current rate + 3%. So for me that made the stress test point around 6%. Having absolutely zero confidence in the "expert" predictions about where rates were going, we did our own checks in the 10%-15% ranges. Probably overkill but it at least gives us an idea in advance where our pain point is. For us it'll be about 13%. FP do you get hit with penalties if you pay out your home loan early? We've decided bollocks to investment properties, at least for the next few years. Just invest the $'s and use the earnings for holidays in someone else's place. They can have the stress of holiday rentals, which we've decided are possibly the worst RE investment you can make. Purely depends on the product you have. Our mortgage was never huge, so the ability to over pay was paramount for the first two year fixed product but then we moved to a tracker which has no early exit fees. Overpaying varies wildly as well. I picked a product that allowed 10% overpay p/a of the borrowed amount, not the owed amount, which meant every month my overpay has having a greater effect. With the tracker I'm on now (which tracks at 1.2% above base, there is no limit on overpay and no exit fee. We will be done in less than a year. |
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