While some Australians may rejoice at the idea of a drop in house prices, interest rate rises mean home owners face the prospect of their asset dropping in value at the same time their mortgage repayments steadily increase.House prices in Australia are dropping at their fastest pace since the global financial crisis
Those who bought houses at the peak now face a double whammy of dropping asset prices as rising interest ratesAnd those who bought recently, at the peak of the market, are more likely to have the most left to pay off on their loans, meaning interest rate rises will cause them the most pain. Bobby Graham bought a house in January in Hobart's outer suburbs for slightly more than he had hoped to pay, after saving for the past five years.There have now been three months of straight rate rises, and another due today.
While he is not struggling to meet payments, Mr Graham says the changing circumstances have meant he needed to adjust something else — his expectations."It's the perfect storm — you pay the higher price because you bought at the peak of the market then there is an increase in interest rates," he said.He described the increases in his mortgage repayments as "a bit of a kick".
In Hobart, there was a 1.5 per cent drop in house and unit prices in the past month, in line with similar falls in Sydney and Melbourne.
We aren't even at long-term average interest rates yet. The banking sector, APRA, the Australian government and the RBA has a lot to answer for here.
Still got streamers up from the housewarming, perfectly placed to gloat about his split system A/C. This is all way too sad…
A low debt-to-income ratio is generally under 3.6, and is often viewed favourably by lenders. he must be more than 3.6
Buy in Gloom, sell in boom.
Maybe he should have borrowed within his means, then.
Oh, life isn’t going perfect for someone - let’s all stop what we’re doing and feel sorry. Ffs
lack of financial education
Here is some life changing advice...'never trust governments' 😂
Wait a sec... He has to change his lifestyle to handle minor rate rises? We aren't even back to the last 20year average of rates. Did he think they were staying at emergency level for his entire mortgage?
Perhaps he should have listened to everyone who predicted this would happen.
Basics of economics. If you can't afford a loan at interest rates above 5% then you should never have gotten a loan. The banks have fooled everyone