RBA Rises Rates for The 9th Time in a Row

Trying2SaveABuck on 07/02/2023 - 15:04
Last edited 07/02/2023 - 15:54

The RBA have announced its 9th consecutive rate rise in a row
https://www.news.com.au/finance/economy/interest-rates/rba-i…

Interest rates a ~4x higher then they were pre-pandemic in December 2019 the cash rate was 0.75% it now is 3.35%

We have about 1/3 of home loans coming of 'fix terms' this year meaning the 'actual' affect of the rate rises have not be felt but a lot of borrowers

now before the Karens post
a. in 1990 interest rates we 21%
or
b. you should of seen this coming

no one cares you paid 21% on your $30,000 home loan

literally no one and i mean no one could have seen this level of interest rate hiking happen in such a short period of time this is history making speed rates are rising - keep in mind the high inflation is also hurting borrows so it is a double hit

of course we need to combat inflation but im posting to see how this will affect people who are 'borrowers' like myself - i know a few people that are 'really' feeling the pinch and wanted to say there is support out there via financial stress hotline and you can contact your lender for support regarding your situation if you are finding yourself in trouble

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  • 496
    Interest Rates have me worried
  • 357
    Interest Rates dont have me worried
  • 278
    I dont have a loan
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Comments

    • Daniel Plainview on 08/02/2023 - 17:03
      +2

      I wish I could place some of this post on my garden. Lots of words, very little sense.

      • [Deactivated] on 08/02/2023 - 17:53

        Yeah I agree with you - carry on, thanks for stopping by … I should have put a TLDR
        'Current Situation Predictable'

  • hasher22 on 08/02/2023 - 18:15

    If you don't have a loan, you're still affected with rent rises.

    The only people directly not affected are people not paying rent and don't have a loan.

    It's killing me as my rent went up from 500 > 670!!!! And we're finding a new place right now.

    • dowhatuwant2 on 09/02/2023 - 12:01

      Move in with your folks?

      • hasher22 on 09/02/2023 - 12:05

        Can't :(

        I live with my mother. Unfortunately, my mother's 3 marriage break ups lead to this situation over time. And living with one of my 3 step dads is not an option.

    • Frozensage on 12/02/2023 - 22:24

      ppl fail to see that increase in interest means not just mortgage but everything else debt funded too including cars, business, credit card, personal loans etc.

  • Drakesy on 08/02/2023 - 19:15
    +2

    I think the biggest issue is that for the first time in a generation the boomers hold an anequally high proportion of the wealth as they were the ones that paid their mortgages off years ago. These are the people who are going out and buying up property and investments with cash, not loans and are largely unaffected by the increase in rates which is why it may be taking longer to reset than initially thought. Where the increased interest rate forces out borrowers a boomer will happily jump in, snap it up and rent it back to those displaced, profiting in the process.

    The government really needs to start penalising multiple investment properties to hinder the almost artificial constraint on the market that are tax breaks on investment properties.

    • Daniel Plainview on 08/02/2023 - 19:41
      +1

      The biggest issue/s are:

      • our housing market is very unaffordable (not sure how it compares to other 1st world economies? Perhaps some one could advise?), resolving this is incredibly complex & likely near impossible in even the long term

      • Australians, unlike most of the world still have a mindset where they still feel it's a near 'birthright' to be the owner of their property, this is very different to a lot of the developed world - and let me stress this is not 'wrong' in and of itself however but it's forcing a round peg into a square hole for many folks given the previous point of unaffordability - insisting you own something you cannot really afford is always going to end badly.

      • Australians are still pretty obsessed with living in the capital cities, hence they're largely amongst the least affordable places to live in the world (it only takes 2 different people to insist they get a property at auction and the sky is the limit!)

      • too many folks want too much, too fast - the Australian property market is perfectly made to 'step' up in the value of homes you own but it seems like folks are often 'maxxing out' their loan capacity early in the process leaving huge sums to pay when the market conditions change

      • there's a bizarre perception that you cannot sell out and lose money on your own home, even when things change - it's a financial asset above all else and as unfortunate as it is, thats the best path for many folks - lose the battle but win the war in the long term, however folks are very reluctant to do this and thus compound their issues

      Bottomline is caveat emptor - you sign up for a loan, you make the nice tax free profit when you sell the house - but you also get the negative stuff too and if over the span of a 25-30yr loan you're several yrs in an expected it to always stay near historic lows, well that smacks to me of sadly complete self inflicted injury.

      • irony on 10/02/2023 - 17:27

        our housing market is very unaffordable (not sure how it compares to other 1st world economies? Perhaps some one could advise?)

        House price to income is pretty average fo rthe OECD.
        https://data.oecd.org/price/housing-prices.htm#indicator-cha…

        Select Price to Income ratio.
        We are cheaper than the USA, Canada, New Zealand, Germany and many others.
        The belief that housing here is out of whack is mistaken.

    • gromit on 08/02/2023 - 21:00
      +2

      Boomers are not buying up anything, boomers are mostly dead or retired and are a rapidily dwindling population in work or any sort of long term investment. the youngest boomer is 60 years old now. I don't see many 60-80 year olds rocking up to buy investment properties for those juicy long term capital gains.

      • Drakesy on 08/02/2023 - 21:18
        +1

        I definitely am
        Ive lost out on multiple properties to 70 year old grey haired couples buying houses for investments and their grandchildren

        • gromit on 08/02/2023 - 21:45

          Personally seeing almost none and i go to a lot of auctions in the last yaer or 2. Mostly it is the 40 or 50ishs buying. Perhaps u are buying in the market segment that is also a cross over for downsizers?

        • Daniel Plainview on 09/02/2023 - 08:36

          How do you know who they were purchasing the properties for?

          • Drakesy on 09/02/2023 - 11:52

            @Daniel Plainview: Because they were discussing it with the real estate agent and some had their grandkids in tow

            • Daniel Plainview on 09/02/2023 - 13:07

              @Drakesy: Fair enough - lucky for some. Neither my wife nor I received a single dollar in inheritance or assistance etc though it would have been nice of course - it's certainly a massive advantage if this is available in one's family.

              I would wonder if they're really doing them as much of a 'hand' as they perceive as handing over massive amounts of wealth etc without the recipients knowing the true value and sacrifice that would have been required otherwise can often do much harm. But there's a lot of worse problems to have.

  • gromit on 08/02/2023 - 19:23
    +4

    literally no one and i mean no one could have seen this level of interest rate hiking happen in such a short period of time this is history making speed rates are rising

    Many predicted it including the major banks prior to the first raise as it was blatantly obvious rba were behind the rest of the world. While relatively this is huge, in absolute terms it isnt the largest and fastest. Realistically rates are just getting back to where they should be.

    • Trying2SaveABuck on 08/02/2023 - 19:58
      -1

      do you have a source

      • [Deactivated] on 08/02/2023 - 20:07
        +1

        Put some effort in
        Practically everywhere in non-mainstream economic analysis agreed with @gromit.
        I could give you multiple sources but suggest you should broaden your media consumption Martin North, John Adams, Leith van Onselen or globally Michael James Burry who also predicted 2008.

      • gromit on 08/02/2023 - 20:27

        predictions for the US were for 9 straight interest rate rises starting in feb last year from JPMorgon et al. Australia was slated to follow with banks and economists predicting in the range of 2.5% and 3.5% by end of year for Australia depending on how optimistic or pessimistic they were (predictably we landed smack in the middle). go google interest rate predictions for end of 2021 or start of 2022.

        • Trying2SaveABuck on 08/02/2023 - 21:03
          -1

          fair enough what happens when we hit 11 straight rises…..

          • gromit on 08/02/2023 - 21:11

            @Trying2SaveABuck: It should level out hopefully as we are back where rates should be (barring more bad news). A good indicator you can look at is fixed rates, especially multi year ones as this is what the banks really think will happen. Or watch the bond markets. Back in feb 2022 aussie banks did multiple fixed rate hikes within a few weeks despite rba not having changed its stance, writing was on the wall they expected many rate rises. When fixed drops then variable will be following sometime in future.

          • Hearthstone on 08/02/2023 - 22:25

            @Trying2SaveABuck: Prepare for it now 11th is a given, RBA already flag more increase in coming months after that it more or less depend on the inflation and job numbers

            there is a silver lining with rate rise, mortgage holder will feel the pain
            but as a bigger picture, it teaches the market to allocate capital more efficiently and bring balance to asset price valuation

            cheap money makes business and people do reckless stuff and inflated asset price.

            what reckless stuff you may ask? well, you can see it right here, people borrow ridiculous amount of money on low rate to buy inflated houses price based on low-rate distortion, they would never do that if rate was at 6-7%

            the rise and rise of SPAC, my god some of deal are just like throw money at anything, money is cheap, it almost free, just throw it, a few hundred million here, a couple of billions there for business that makes no profit and has prospect of making profit and now they all starting to fold

  • Genghiz88 on 08/02/2023 - 23:10
    +5

    In this day and age, I feel its time for a rethink on how to deal with runaway inflation.
    Adjusting interest rates have been used for decades and is akin to carpet bombing. Lots of people do save, are frugal, paying for their only home. Are basically doing the right thing, and they get hit by the "bomb" anyway. What the RBA needs is a surgical strike. Example, target use of credit card, property speculation, maybe even a temporary increase in consumption tax on "luxury" items. Some loans and spending are good, some are very bad. The issue is the RBA for decades only have interest rates adjustments and a few other tools in the arsenal. The government can do more but will not. Let the RBA be the "bad guy".

    • gromit on 09/02/2023 - 09:36

      the problem with targetted attacks is they are slow and ineffective. hit Credit Cards people use their loans or cash instead, hit luxury items and people just buy other items or spend on house etc. So while yes it is carpet bombing and a lot of innocent casualties no one has come up with a better solution.

      • [Deactivated] on 09/02/2023 - 10:48
        +4

        These are better solutions, but they require the government to act not the RBA. The previous government was happy to do nothing while real estate increased 30% in 1-2 years, they had to keep the voter happy.

        Redirecting where money is spent away from unproductive assets like real estate and luxury imported goods, and into local business and construction is a better solution

        • gromit on 09/02/2023 - 11:30

          They are better in maybe hitting less people, however they are exponentially slower impact so the pain is much much greater. ideally if government gets things right the RBA doesn't need to step in, but that never happens and isn't realistic to expect it to happen as Governments are self centred looking out mainly for their own interest groups and the next election result.

  • iLikeSales on 08/02/2023 - 23:12

    bruuh my rent can increase so many times. How much though… goin to be a tough pill to swallow

  • Doobies on 08/02/2023 - 23:28
    +8

    Rba has to stop (profanity) footing about. 25 basis every other month doesn't change behaviour. Should have smashed us with a single 75-100 basis points last year.

    Shock and awe for me. Inflation goes up, everyone complains and asks for a cpi increases to wages, net result nothing then wonders why inflation keeps going up.

  • FlyingMiffy on 09/02/2023 - 03:07

    Was worried about a property that we were going to sell once the new home is built, but this week the rental appraisal for it went up by about 35-50% in 6 months, so now selling or leasing is a choice rather than a need. I think for alot of people, this last rise was probably at the top end of the worst case scenarios when they were buying 2-3 years ago, so we're heading to a hard landing for sure - wont be surprised to see recession then another rapid rate decrease.

  • footyboy on 09/02/2023 - 07:33
    -1

    Broker here - for those worried about further rises, fixed rates are looking pretty tasty again.

    2 year fixed (with 100% offset) loans are out there at 5.29%.

    Just saying!

    Aidan.

    • Brianqpr on 09/02/2023 - 09:37
      +4

      If the banks think locking in just over 5% for two years is a good deal for them, it shows you where they think rates are going over that period and it isn't up. They might be wrong though, they certainly were when they let me lock in 1.86% for 3 years in September 2021.

  • jatbinks on 09/02/2023 - 08:40
    +6

    Just hoping the folks start defaulting on their loans soon so I can grab a cracker deal and finally get a home.

    • Brianqpr on 09/02/2023 - 09:38
      +2

      What a lovely sentiment.

      • Daniel Plainview on 09/02/2023 - 10:56
        +1

        To be fair - this is OzB, and if we were talking about a business going under and having to have a firesale/clearance it'd be incredibly popular.

        That said, its likely one of those things you think but don't post or say. :-/

    • jaimex2 on 09/02/2023 - 10:27
      +3

      Except no one will lend you money because the bar will be too high.

      If you couldn't meet the criteria before you certainly can't now.

      No one wins here except the banks.

    • tomfool on 09/02/2023 - 11:22
      +1

      Very unlikely. Its more like prices with stagnate and not drop by any of the %'s some hope/think.
      The banks, like during the GFC, will give favorable terms to those under stress, interest only, deferred payments etc. Its not in the banks best interest for mass defaults to occur as they tend to then cause an accelerated depreciation in assets. Add to this that most Australians value there house above all and will do whatever they can to retain it.

    • borgainerz on 09/02/2023 - 12:26

      This !

    • Ghost47 on 09/02/2023 - 22:24
      +1

      Wishful thinking sadly.

      Rental vacancy is extremely tight, if anything landlords will just rent out a second bedroom or move back in with parents and rent out the whole property. That's why the government opened the immigration floodgates again.

      Everything this country does is focused on inflating house prices. Kind of sad to be honest.

      • tomfool on 10/02/2023 - 11:12
        +1

        The property prices crashes is brought up with such regularity and it just does not happen. The best option is factor in long term avg consumer loan rates regardless of what the banks say, save and buy what you can afford at that point in time.

        2010 it was Steve Keen predicating a crash of 40-50%
        2014 it was Harry Dent predicting a +25% drop
        2016 60 Minutes and Jonathan Tepper predicted 30-50% drop
        2023 Goldman Sachs predicating a 18% drop.

        Prices are high I would think due to

        1. 3 major cities with a approx. 50% of the population wanting to live in Sydney, Melbourne and Brisbane and over 20 million living in those 3 states approx. 80%.
        2. Labour costs are high, the government, both sides over stimulate the construction sector sending costs high, once high they tend not to drop.
        3. Increasing population all flocking to the main cities.
  • Tiredman on 09/02/2023 - 08:57
    -4

    No loans so doesn't affect me. Would be nice if property market goes down more. Happy to buy more properties.

  • bobolo on 09/02/2023 - 09:33

    b. you should have seen this coming.

    Literally, and I mean literally a tonne of people saw this coming.

    1. Rates dropping rapidly to close to 0% rapidly even prior to covid
    2. House prices going to the moon
    3. Covid/lockdowns created a situation where people hoarded tonnes of cash and supply chains heavily hit

    Towards the end of 2021, anyone in finance knew inflation and rates were going to rocket - it was only a question of when.

    • Brianqpr on 09/02/2023 - 09:39
      +5

      Newsflash. Not everyone is in finance or follows finance news. In fact the majority don't beyond the 20 second AUD v USD etc update on commercial news each evening.

      • Daniel Plainview on 09/02/2023 - 10:29
        +1

        @brianqpr
        I agree with you - its hard to generalise but lets assume the majority of lendees were relatively ignorant to the financial markets etc - but how does this pertain to the discussion?

        It feels like you're implying folks needed 'someone' to protect them from themselves? But I might be reading wrong.

      • [Deactivated] on 09/02/2023 - 11:47
        +4

        Ignorance is not an excuse. Don’t borrow hundreds of thousands of dollars without understanding the implications.

        • Brianqpr on 10/02/2023 - 10:51
          +1

          People do though even if they shouldn't because home ownership is put on a pedestal with phrases like "great Australian dream".

          Lets look at financial advice. For even the most basic advice you are required to provide written warning of all the risks involved and confirm client understanding of the advice. If you don't and there's later a complaint, you will be found liable for any losses by the likes of AFCA. The industry is heavily regulated to protect consumers.

          This doesn't apply in real estate and I've often wondered why, as the investments are generally much larger and usually involve buying the asset with borrowed money (gearing) which adds to the risks. If the banks were say required to disclose what repayments would be at various interest rates then it might go some way to avoiding people getting in over their heads. But they aren't and just meet the minimum requirements knowing they can repossess if things go bad for the customer.

          Fine to say people should work this out for themselves, but why not say the same about financial advice then? Its a double standard especially when buying a property is the biggest investment most people will ever make.

          One reason for this is there are a lot of vested interests in keeping property values high. The government likes this as it creates a wealth effect and more economic activity. The banks like it as it leads to higher profits. The media likes it as it creates a lot of advertising revenue for them. The real estate industry likes it because they get higher commissions on sales, commissions being something that's largely been banned in financial advice…

          • Daniel Plainview on 10/02/2023 - 11:46

            @Brianqpr: @Brianqpr , again it's a sound point but at some point adults have to take ownership of their actions. As a society we can't wrap everyone in cotton wool for every conceivable harm that might befall them.

            You can be killed instantly crossing the road wrong or with your powerpoint at home - yet we trust people will apply common sense and overall it tends to work out.

            if we went the other way and instituted all these restrictions and requirements before people could access any credit and made very harsh hard limits mandated by law - there'd be no end of complaining about the bueaurocratic overreach. And rightly so.

            it's not on the banks to disclose what the repayments would be at certain interest levels - though I'd be gobsmacked if this wasn't something they already don't do willingly - as they want a loan default LESS than the owner as they want to make their profit over the full term of the loan, not on a foreclosure sale.

            Even if they didn't it's primary school maths to easily see this on one's phone….honestly, this smacks of buck passing done to a level of silliness.

            • Brianqpr on 10/02/2023 - 16:59

              @Daniel Plainview: I agree, but a different standard applies to financial advisers vs everyone else including banks. Hardly fair. It either should apply everywhere, or nowhere.

              Re crossing roads, you get taught to do this properly as a child. You can't drive a car legally until you've demonstrated (at least on that day lol) you know how to handle the risks and know the road rules.

        • Ghost47 on 11/02/2023 - 15:08

          I think it needs to be stated that there are multiple factors to consider when people say stuff like this.

          For one thing, borrowing an objectively large amount of money (e.g. $1 million) is an extremely risky and silly thing to do no matter what rates are. I don't care what people say, these days this is still not a small amount of money even if you are earning a salary like $300k a year.

          For another thing, listening to people who are deemed to be the experts in a field in which you are not, is not — and should not be — something that is considered to be stupid.

          I am finding it quite sad that people seem to have no sympathy at all for those (well, first home buyers mainly) who listened to the RBA. Not everyone understands how interest rates movements work, not everyone understands macroeconomic principles, not everyone understands interest rate forecasting is not some sort of easy task that a magical model can solve.

          Sure, people should educate themselves deeply before making a decision like buying a house. They should research and consider what would happen if rates go up from a record low. They should have a buffer of $100k in the bank. But we just don't live in a utopia where everyone acts with proper due diligence.

      • bobolo on 09/02/2023 - 13:06

        Newsflash. OP stated "literally no one and i mean no one could have seen this level of interest rate hiking happen" - my comment was responding directly to what OP said.

        Also as someone else replied - ignorance is not an excuse. If you were expecting interest rates to stay at 2% or below forever when taking out a massive mortgage, then you only have yourself to blame. Even someone with limited to no understanding of finance should know that interest rates that low is not the norm.

        Even with all the rate rises so far - the current rates are still pretty normal considering 4% - 7% has always been the standard in a healthy Australian economy. If you are stuggling to stay afloat on that then you are simply the victim of modern world Darwinism

      • pogichinoy on 10/02/2023 - 11:23

        They don't need to be.

        It's commonsense. e.g. My repayments are cheaper, what should I do with that extra disposable cash? How about you put it into the mortgage so you pay it off quicker.

    • PopCounty on 10/02/2023 - 17:57
      -1

      lol
      Phillip Lowe is Governor and still couldn’t see this coming. Talk about opinions.

  • jaimex2 on 09/02/2023 - 10:24
    +2

    It's all a ruse to pay back the stupid amount of borrowing they did during covid, all countries are doing it except Japan who acknowledges -

    International factors are the cause of inflation, not low interest rates.

    There hasn't been a wage rise and all the cheap money was sunk into buying dirt from each other.

  • ihbh on 09/02/2023 - 10:38
    -3

    You forgot a 4th option.

    I have a lot of savings (e.g. reitrees). More rate rises please.

  • pogichinoy on 09/02/2023 - 11:09
    +3

    Gen Y here.

    Everyone should have seen this coming. Rates were at emergency levels due to the state of the economy and the pandemic.

    The RBA quote is:

    "The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest."

    People tend to forget the entire quote and only focus on "not raising rates till 2024". Obviously inflation figures aren't in the targeted 2-3% range, which is why the RBA acted earlier than 2024 and increased rates.

    The media are also to blame for poorly reporting the actual quote.

    • Daniel Plainview on 09/02/2023 - 11:25

      @pogichinoy , Good post - and yes, folks should have read the entire quote - not just the headline in the article etc. Though as I said, many were falling over themselves to get approved for 'max' loans - they needed little encouragement.

      Lets be honest - how many of us have spoken with friends and they go to the bank/broker and ask,"How much can I borrow?" - wanting to be approved for as much as possible. There was a post on here just yesterday of a person asking for a broker who would approve him for the highest possible amount!

      And then when they get this 'maximum' amount - they oddly after see this as a budget where as long as they spend up to it, all is fine - when it's the exact opposite! If the maximum speed you car can do is 240km/hr, it's likely not a very good idea to push it to that level - and yet this is exactly what many (not all) do with their personal finances.

      • [Deactivated] on 09/02/2023 - 15:09

        The average wage in Australia is around 90k p.a. that wage will give you a maximum borrowing power of less than 500k. What do you expect people to do when average house prices are nearly double that?

        • pogichinoy on 09/02/2023 - 16:02
          +2

          Why does average wage = average housing price? That is a poor metric.

          If they can only afford 500k, buy a flat/unit/apartment.

          Purchase something within your means if you HAVE to purchase.

          • [Deactivated] on 09/02/2023 - 16:29
            +1

            @pogichinoy: I don't think you understood what I was pointing out - 500k does not buy much real estate, for a couple who want to raise a family a $1m loan is not obscene extravagance anymore, it's what you need for a basic townhouse less than an hours drive to the city centre (in traffic). I don't understand why people are deriding recent borrowers

            • Daniel Plainview on 09/02/2023 - 17:22

              @[Deactivated]: But you are saying they need (and I'd say it's actually better worded as WANT) a $1m property - as it has all the features you pointed out.

              However, if as @pogichinoy says, they by expert concensus cannot 'afford' it - wouldn't it seem self sabotage to go ahead and 'hope for the best'?

              Unfortunately, in that scenario - which I think is quite realistic, compromise/s are needed. I know many do, but I suspect many others simply push ahead and plan to figure it out as it comes - which is fraught with danger as they were already walking a very narrow line in their ability to service their undertaken loan commitments.

            • pogichinoy on 09/02/2023 - 19:07
              +1

              @[Deactivated]: No offense to you but the fact that you're pointing out that 500k does not buy much real estate is the problem with some people today. They've grown champagne tastes but only have beer money.

              Sydney, is the most expensive property market in Australia, yet people with beer money, and yes, the average wage is such, turn their noses up to housing in suburbs for whatever reason.

              Why must the metric be less than one hour drive to the CBD in traffic/peak? The other day it took me 45 mins to get to Wolli Creek, NSW, during peak. One time it took me 30 mins to get from Circular Quay to Haymarket in peak.

              Are we that needy that we must live within one hour to the CBD in traffic/peak?

              We are deriding borrowers because they bought with the lack of understanding on the economic marketplace and the impacts of inflation and interest rates on their financial responsibilities.

              There are $500k townhouses in Ingleburn, NSW.

        • gromit on 09/02/2023 - 19:06
          +2

          What do you expect people to do when average house prices are nearly double that?

          save up and buy a below average house or one that involves compromises like location or not buy. buying beyond your means just means you are in a better than average chance of losing everything, especially in the insanely low rate and high house price situation.

  • raginggiant on 09/02/2023 - 11:28
    +1

    The real problem is that APRA's rules mean that banks need to assess repayments at ~3% higher than they are lending at so 8-10% in most cases. This will completely close the market to most people. You can be in the top 10% of household earners right now with a 20% deposit and that will not be enough to service a loan for an average house in an east coast capital. That's going to destabilise the entire pyramid which will impact everyone including those without a mortgage (lower house values) and renters (landlords will push their losses onto them). It's a big %@#&sandwich for everyone caused entirely by the RBA overpumping the housing market.

    • dowhatuwant2 on 09/02/2023 - 12:10

      It won't close the market, it will force market adjustments aka housing prices will DROP.

      • raginggiant on 09/02/2023 - 19:39

        That's not what I'm seeing right now. Supply is low but demand is super high. A lot of people are already completely priced out of the capitals. Prices aren't really dropping because there is no options yet and there are still plenty of buyers for fewer houses on the market.

        The rates hikes might start to force more to sell because they can't afford repayments or negative equity but that isn't happening yet. What's happening now (I'm very actively looking in Brisbane) is heaps of buyers and very few sellers. It's a mess but certainly not a market collapsing yet. The problem comes from everyone else who isn't sitting on a big pile of cash. That's also where turning on the immigration pipe makes this worse too because it will keep demand high (as builders are just having a big sleep now). Supply is limited and demand is increasing.

        • dowhatuwant2 on 09/02/2023 - 21:31
          -1

          Ahh sure, that’s why corelogic shows significant drops already when prices lag rate rises by a good 9 months.

  • fullmetal on 09/02/2023 - 11:30
    +1

    waiting for the 10th

  • aboogee on 09/02/2023 - 11:40
    +1

    Interesting poll
    I am not an economist, but
    (1) I expected this given the large wealth gap
    (2) I am genuinely curious if this reduces the effectiveness of the rate hikes when it affects only ~40% of population
    (3) Assuming (1) and (2) are true, then this would again worsen wealth gap because so many rate hikes required before it even start affecting the wealthy (if at all)

  • [Deactivated] on 09/02/2023 - 11:45
    +2

    If you’re going to panic, panic early

  • [Deactivated] on 09/02/2023 - 11:49

    Ignorance is not an excuse. Don’t borrow hundreds of thousands of dollars without understanding the implications.

    Who owns the risk? You do.

  • acersaurus on 09/02/2023 - 11:58
    +1

    I have a home loan fixed for a while yet, but we are certainly feeling a bit poorer with inflation the other factor.

    Interests rates are a blunt instrument that do not affect people equally. It is actually fairer to take the heat out of the economy with tax depending on the design of the tax, and so I would prefer a tax to rate rises.

    There's so many baby boomers and gen xers around with no home loans and $2 million plus, even $5 million is not too uncommon for baby boomers. A lot of the spending is coming from them and they won't stop for interest rates - which means interest rates will need to rise further in order for the mortgagees + renters to take the heat out of the economy. Of course, I realise there are people who aren't doing well who are gen x or baby boomers just saying that those generations and wealth circumstances (no loan in many cases) are a key source of the heat in the economy.

    Gen x will probably complain here because they are hardly ever mentioned or associated with wealth inequality while boomers are, but they generally had it pretty good too.

    • aboogee on 09/02/2023 - 12:20

      Not to mention all the cash-rich migrants
      Agree with the tax approach - interest rate as a tool to achieve monetary policy / objectives feels obsolete now

    • Hearthstone on 09/02/2023 - 12:24
      +1

      everything go around in circle and cycles and every generation has its challenges how you managed them when the cycle is not in your favour is the key to success.

      now not long ago retiree get bugger all for their saving some are struggling with low rate and the mortgage holder are having parties, now it is their turn to get decent return for their deposit.

      Gen X go through a period of high rate and high unemployment in the 80s and 90s
      Current generation facing high rent and properties prices

      next generation there will be something there for them to deal with, be it lower pay packet due to AI or high unemployment or rate or maybe a combinations of many other factors yet to surface

      • [Deactivated] on 09/02/2023 - 15:13
        +2

        It isn't all cyclical, wealth inequality has increased, and the previous generation have become millionaires while the current generation are getting poorer. This isn't going to reverse on it's own, or probably ever - the wealth of the older generation will be passed onto the lucky few who inherit it, the rest of the population will remain forever poorer.

        • Daniel Plainview on 09/02/2023 - 15:38

          Inequality of wealth will have its reckoning one of these days - is so badly out of whack and the system is so rigged against folks that there will be a 'Storming of the Bastille' type moment but on a global scale eventually.

          When the Wealthiest 1% of people, hold 38% of all 'wealth' and the poorest 50% hold under 2% the system is broken.

          https://www.imf.org/en/Publications/fandd/issues/2022/03/Glo…

          • [Deactivated] on 09/02/2023 - 15:44

            @Daniel Plainview: How can that happen? I feel like things will never change. In the era of drones and Ai, numbers no longer matter.

            • Daniel Plainview on 09/02/2023 - 16:00

              @[Deactivated]: Not sure but hopefully I won't be here to view it as it will not be pretty.

              Far from it, numbers still very much matter but undoing a few hundred years in a short period will require some major sacrifices. The guys at the bottom will have very little to lose and the ones at the top, everything! So will get ugly.

        • acersaurus on 09/02/2023 - 15:44

          Another factor that isnt cyclical is the skewed age pyramid. More and more people are retiring - this means there is less supply of labour relative to the quantity of people spending, which is inflationary, and more of the labour that there is left to go around is going towards the needs of the old e.g nurses. So labour shortages from the skewed age pyramid will likely cause inflation.

          I have nothing against baby boomers or anyone else, it's not their fault there's a skewed age pyramid - but some generations are luckier than others and yes, some of these impacts do appear a one off rather than cyclical.

          Anyway best advice is to make the best of it still, regardless of your generation. If you take the long view of history this is one of the best times to be alive.

    • Daniel Plainview on 10/02/2023 - 10:56
      -1

      This whole 'this generation had it this way' vs another generation vs current generation is really pretty idiotic and only fractures constructive discussion & progress on the matters.

      I'm born in the 70's, Gen X I believe. Different generations had it 'better' or 'worse' with all aspects of life, not just housing affordability. e.g stuff you can walk in and have checked at your GP now, saw you getting undiagnosed and dying in the 80's, etc etc.

      So sure that 70yr old guy down the street didn't have to contrbute as many years of his household income to afford his 4 bedder, but there's also a myriad of areas vastly inferior to the present that he dealt with before we imply life was a 'bed of roses' for him due to one sole area being 'better' than now. :-)

  • hasher22 on 09/02/2023 - 12:16

    One of RBA's excuse to raise the cash rate is that spending has not slowed down but I can't find any official or articles regarding spending has or has not significantly slowed down. And if people are spending equal or close to their normal budget on X items then what are the factors to it?

    1. Are consumers spending more on credit cards, afterpay etc?
    2. Are people now using beforepay and similar processes to get their paycheck to pay for things?
    3. Are people spending the same amount BUT for less items?

    On a very shallow point of view, if I am paying $15 for dish washer tablets but was paying $12 for it before, but RBA says…. "hey, you're spending too much! That's not right, here's a cash rate rise!" But….. items have gone up, thus people are paying more for the same items, which counters the "people are spending more on items" excuse from the RBA.

    Another stat could be, how many items are people buying for $100? You can't blame people for spending $100 1 year ago and getting 30 items, vs $100 for 20 items now and just look at the total amount spent and say "They're spending is the same! Raise the cash rate!"

    • Hearthstone on 09/02/2023 - 12:36
      +2

      that the whole point, people will eventually exhaust their cash spending on inflationary items and debt repayment, then spending will slow, then it may cause recession, then business start to make less profit, then they start sacking people and people start losing jobs, then all those quiet quitting or want big pay packet end up without a job

      then people stop buying stuff cos they ain't got money, then asset price drop.

      the cycle reset for those that can not manage this scenario and they get a big setback, then they start dropping rate to stimulate growth again and a new cycle begins and the mob that get wiped during the last cycle reset will learn to be more cautious and make better judgement next cycle.

      • WhyAmICommenting on 09/02/2023 - 14:14

        the mob that get wiped during the last cycle reset will learn to be more cautious and make better judgement next cycle

        Until they forget again

    • Ghost47 on 09/02/2023 - 22:12

      Are consumers spending more on credit cards, afterpay etc?

      Interesting you ask this because I saw an article today that did talk about this, although it was originally from November. Turns out there has been an increase in applications for credit cards. This doesn't exactly mean people are spending more on credit cards but simply that there is more demand for credit.

      I find it all hilarious, at least the minority home owners get rich whilst everyone else gets poor. /s

      • hasher22 on 09/02/2023 - 22:42

        This doesn't exactly mean people are spending more on credit cards but simply that there is more demand for credit.

        Thanks for the article, did have a good read, though there is a line in the article that state: "“In light of this, some consumers may be turning to unsecured credit to help them bridge the gap,” he says.".

        May not be all credit card applications, but there's no doubt that people are turning to credit cards and other BNPL platforms to pay for items.

        I have a side business on shopify and my afterpay sales have increased by 30%, no doubt people want to maintain their lifestyle by at what cost? Debt…

        Another interesting stat: "The biggest increases in demand for credit cards and personal loans were in NSW, Victoria and the ACT, the states and territories with the highest house prices and biggest mortgages."

        • Ghost47 on 09/02/2023 - 22:48

          Hmm I see, that's interesting! Not sure if you heard but earlier this week there was news that OpenPay collapsed.

          Out of curiosity do you get the full payment in the one transaction when people buy stuff using Afterpay?

          • hasher22 on 09/02/2023 - 23:10

            @Ghost47: Oh ouch with OpenPay

            Yes, I get the full payment (after fees), though AP sucks because they take a huge chunk out of the final sale. Shopify takes 1.75% and AP takes from my sales 7% - 10%. As a sole trader, I need AP but if I could, I would remove it but people use it. Such a double edge sword.

  • borgainerz on 09/02/2023 - 12:23
    -2

    b. you should of seen this coming I love this one !!!

    I don't understand shit of what this means, can someone ELI5 again?
    is it bad for people who have mortgage, that's it? I don't have mortgage, nor any debt, how does it affects me? rent increase?

    Thank you

    • acersaurus on 09/02/2023 - 12:28
      +1

      If you are renting then generally speaking yes - rents have gone greatly up on average with higher interest rates and lack of supply.

    • pogichinoy on 09/02/2023 - 13:03

      In addition to @acersaurus mentioned, lending criteria has and will get worse, i.e. you won't be able to borrow as much.

      Cost of living has gone up across the board and will get worse as inflation rises.

    • MrMoo on 09/02/2023 - 13:06
      +1

      Rent will screw you in the ass and then you'll see all the posts about why landlords are so greedy and charging so much rent.

      Everyone gets effected, don't think if you have no loan you are laughing at those who do.

      • TEER3X on 09/02/2023 - 20:22
        +1

        *affected

    • CauseNEffect on 09/02/2023 - 14:11
      +2

      Unless you are living on the streets or have free housing this will affect you. Less people spending mean less jobs for workers. Cost of living keeps increasing across the board (food included). Theres a significant knock on effect.

      • TEER3X on 09/02/2023 - 20:23

        Unless you are living on the streets or have free housing this will affect you.

        this is affecting street beggars too, they are receiving less donations, because people have less disposable income.

        • CauseNEffect on 09/02/2023 - 20:28

          Well that sure is depressing 😕.

  • MrBillions on 09/02/2023 - 13:11

    Just such a rudimentary action. Can't they think of something better?

  • bobolo on 09/02/2023 - 13:17
    +2

    On a positive note, the people who took out massive mortgages to keep up with the Joneses will all have to sell up when they can't afford their inner city shoeboxes anymore, and collectively move to more realistic and affordable areas, including the Joneses themselves - so they can all collectively still keep up with each other!

    • CauseNEffect on 09/02/2023 - 14:16
      +4

      Not really mate, its not high net worth couples /familys who got approved huge mortgages who get hit first. Its the family's out in western sydney struggling to make ends meet that can barely afford the mortgage currently that are now sinking.

      Defaults will be reported in belts in suburbs.. history shows these from the last recession type event.

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