Effect of interest rate hikes - are you feeling it?

virhlpool on 29/04/2023 - 18:03
Last edited 03/05/2023 - 18:44

Hi OzBargainers! This is a hot topic at the moment and it's hard to ignore. Whilst on one hand I see people spending money on literally everything (houses, holidays, shopping) like there's no tomorrow, on the other hand media has been making the interest rate hikes a big deal (even though RBA seems to have been much less aggressive/ decisive than the other central banks) and then there's news about layoffs (at a very small scale yet) and softening job markets. As if this isn't perplexing enough, my every visit to a shopping centre or a mall gives me a bigger shock about the price increases - 30% price hike in 3 years sounds 'mild' now when some products have almost 60%-70% higher prices and yet I don't see people at large complaining about it (or rent increases for that matter).

Things are no different on the housing front. Some economists predict price rises in the near future whilst others predict a fall. People are still very optimistic about price trajectory and don't seem to hesitate to take $1m-$2m loans even at 6% interest rate, demonstrating that a huge population, at least in the major cities, still has an ability to repay $8,000-$10,000/ month towards the home loan despite such a sharp increase in overall cost of living.

I was wondering if there is a huge number of people who have started feeling the pain (though it doesn't look like if you visit any stores) OR not yet. Whilst obviously no one has a crystal ball, it will be insightful to hear thoughts of savvy OzBargainers on the current state (and direction) of economy, inflation, property market, etc. Feel free to share your ground-level observations as well, if any. Media can be biased so a neutral voice can be often more interesting. Thanks!

P.S.: Added a poll later so there are only a few responses. Your vote is welcome!

Poll Options

  • 158
    No, I don't feel the pain. I continue to live like before and my saving/ buffer is still decent.
  • 172
    Yes, I feel the pain and my saving has shrinked but I have a large enough buffer so it's ok.
  • 63
    Yes, I feel the pain and my saving/ buffer has shrinked significantly. I'm worried.
  • 12
    Yes, I am in stress and actually struggling financially.
Financial

Comments

                  • gromit on 05/05/2023 - 07:07
                    +1

                    @grasstown: How can you say "Some people aren’t as sophisticated as you" while in the same voice say they relied on a 3rd party like the RBA for advise rather than trusted sources. That is like people that rely on articles from news.com.au for their advise and then complain when they make the wrong decision. If you are making life altering decisions do at least the basic research of finding out who you should be trusting for advise.

                    • grasstown on 05/05/2023 - 07:17

                      @gromit: You’re probably the same person who thinks people who trust APRA to protect them from banks deserve it.

                      • gromit on 05/05/2023 - 08:33
                        +1

                        @grasstown: You seem to want to live in a world where you are wrapped in cotton wool and every decision is made on your behalf. Personally I think that would suck, take some personal responsibility for life altering decisions.

                        • grasstown on 05/05/2023 - 10:48
                          -2

                          @gromit: You seem to judge those who make mistakes harshly.

                          • gromit on 05/05/2023 - 11:54
                            +1

                            @grasstown: not at all, however I expect those that make mistakes to take responsibility for them not to blame others or expect extra special treatment. We all make mistakes, those that made these ones really need to take a hard look at themselves as they gambled and lost, Even if the idiotic RBA prediction had been correct they would be in exactly the same situation in 12 months time.

                            • grasstown on 05/05/2023 - 13:07

                              @gromit: You said “ deserved what they got”

                              • gromit on 05/05/2023 - 13:32

                                @grasstown: compared to blaming the RBA absolutely. If you are going to trust a random entity then you are definitely somewhat deserving of the pain. They are not financial advisors, they are not mortgage regulators or bank regulators and they have no remit to act with the interests of mortgage holders, why would anyone look to them for advise for a housing loan? whats more it was pointed out even when those statements were made that it is probably wrong and certainly not advise home buyers should be taking.

                      • virhlpool on 05/05/2023 - 11:04
                        +1

                        @grasstown: That's a very bad analogy. APRA's job is to protect people from the banks and regulate the banking system in general. RBA's job is to control inflation and thereby money supply, not to protect borrowers' loans taken beyond the means.

                        • grasstown on 05/05/2023 - 13:10

                          @virhlpool: The analogy is that Morrison blamed the consumer not the banks after the Commissions findings.

                          Gromit said they deserved it, blamed the consumer. I’m saying the consumer was not sophisticated as them and was led there

                  • virhlpool on 05/05/2023 - 10:56
                    +1

                    @grasstown:

                    Some people aren’t as sophisticated as you. Some people are suffering as they thought they the RBA‘s words were messaged and directed to them. Never did the media say not to listen to them

                    They are sophisticated when it comes to clapping in auctions and buying $1m or $2m (or even higher for that matter) homes but when it comes to taking the responsibility of what they did, they aren't sophisticated suddenly, ay? 'Conveniently' sophisticated they seem to get.

                    A lot of them bought in 2020 and 2021.. have they been not been 'sophisticated' enough when the market was going up and they were enjoying the 'hard earned' equity? Even now they are sitting on decent profits.. why not sell the properties if they realise they did a mistake? It's not late at all. There is another set of 'innocent' buyers who may be willing to pay even higher.

                    • grasstown on 05/05/2023 - 11:06

                      @virhlpool: Some did not expect this interest rate hike. House prices are lower than they were when they bought. They were encouraged through government policy and others to buy and get into the market. Some did not see this coming, with the increase of cost of living.

                      • virhlpool on 05/05/2023 - 11:07
                        +1

                        @grasstown: So why whinge for what 'they' themselves did! No one else did it for them. There are millions of people who didn't do it and acted cautiously/ wisely and they were termed as 'left out' when the market was going up (and it still is). Why would this lot of people not deserve the inflation to be in control very quickly so that their cost of living is back to normal? They are suffering for no reason, you may as well say. Come on.. be fair!

                        If the borrowers are in pain, market is still very very very strong.. just sell the property and get out rather than blaming others for their own did. That's how any market works. Most of them are sitting on profits and still whinging..

  • devize on 02/05/2023 - 14:44
    +1

    More pain coming

  • Prop Trader on 02/05/2023 - 15:03
    +2

    Fairly good move by the RBA to protect the Australian economy.

  • umoddbro on 02/05/2023 - 15:05

    Unless you're overleveraged….

  • adgnetworks on 02/05/2023 - 15:20

    I dont feel it.. feels the same as 2010 when i got my loan..

  • eklipsils on 02/05/2023 - 16:12
    +1

    Anutha one

    • Mikeer on 04/05/2023 - 01:02
      +1

      hands eklipsils $10,000 in cash
      Buy yo momma a house

  • MrBillions on 02/05/2023 - 18:37

    ferk…up up up again

  • DR-JEKL on 02/05/2023 - 19:45
    +1

    My wage has gone up due to job promo, so its just been absorbed by cost of living really.

  • Herbse on 02/05/2023 - 20:47
    +1

    People think buying cheaper groceries is "doing it tough" or "feeling it". Yet the same people are most likely still buying unecessary electronics, latest mobile phones, TVs, car upgrade etc. Planned holidays and continue to go out for dinners, entertainment and so on.
    People are still buying houses at the inflated rates, and multiple property owners aren't selling.

    • virhlpool on 02/05/2023 - 20:52
      +2

      People are buying absurdly expensive holidays, cars and houses, let alone silly groceries, ay. RBA doesn't seem to like all this. The rates will need to keep going up until and unless this behaviour changes significantly. My guess, if it's worth anything.

      • xavster on 02/05/2023 - 21:00
        +1

        Agreed.

      • Brianqpr on 03/05/2023 - 12:35
        -1

        Its not those people who are affected though.

    • ATangk on 02/05/2023 - 21:07
      +1

      If people dont spend, the economy dies also. Its not as simple as it seems.

      • virhlpool on 02/05/2023 - 21:44

        I don't think RBA wants people to not spend at all. There's a difference in what I mentioned and what you are saying.

    • Zondor on 04/05/2023 - 13:41
      +1

      People are also giving up on the idea of owning a home which means they have more income to spend.

  • xavster on 02/05/2023 - 20:59
    +5

    My temperature gauge for inflation is shopping centres.

    The shopping centres in Sydney are still packed full of shoppers, so money is still flowing.

    My guess is inflation will be sticky for a while.

    • virhlpool on 02/05/2023 - 21:02

      As a layman, my gauge is the same too and my observation is similar to yours. This commentator has a different opinion though: https://www.ozbargain.com.au/comment/13685716/redir.

    • Cluster on 02/05/2023 - 22:02
      +1

      My temperature gauge is seeing the little 'We Buy Gold!' kiosks in the middle of major shopping centres.

      Saw them pop up around 2008/2009, and they're back now over the past six months.

  • love2buy on 02/05/2023 - 22:00

    I find that there's more competition at the bargain bins where normally not many people would go to.

    • virhlpool on 02/05/2023 - 22:31

      I see.. Which bargain beans? Where?

  • Cheap Bastard on 02/05/2023 - 22:43
    +2

    Starting to feel it, mostly because my fixed rate of 2% ends later this month and will shoot right to 6% at least. It was a good run while it lasted and thankfully we were aggressively saving for a few years during this time. We should be ok even if it goes to 10% as it's mostly investments that will be affected and we'll get more back at tax time now that it'll be negatively geared. We are certainly more conscious about discretionary spending nowadays. If it gets worse, then the wife will have to go back to work full time and/or we sell shares at a slight loss.

    Also seeing a lot of houses being sold around my area. Eg. Two larger double story ones that recently got sold around the 2.5 - 3m mark only a year ago. Their repayments would be ~12k p/month, I reckon. That's nuts.

    I'm normally an optimistic person, so things will get better, I'm sure of it. But unfortunately, I'm also sure things will get get worse for a lot of people too.

  • Wasabi Ninja on 03/05/2023 - 02:22
    +1

    Another rate rise and plenty more to come. Buckle in if you’ve over extended yourself.

  • ravinleague on 03/05/2023 - 06:36
    -1

    Spoke to my realestate agent who manages properties. He said things will easy by the end of the year. On other side of the spectrum, there are these bunch of people who are enjoying this rate hikes as they either don’t have mortgages or paid off debts. These people literally want to see others struggling. I met a few of them and shocked by their psychic mentalities about enjoying when others are struggling with repayments and stuff !!! B

    • MondaySleeper on 03/05/2023 - 06:53
      +1

      I have 500K mortgage and some savings as well. I appreciate the rate rising. No sympathy for those who over extended their loan. Current rate might seems to be a blow but, if RBA didn't do it, the final result will fatel blow in the long run. everything has shot up in the price. So take the pain now.

    • bobolo on 03/05/2023 - 12:36
      +1

      Boohoo. Just like when people who don't own property love seeing landlords struggle as well

      • virhlpool on 03/05/2023 - 13:52

        It's not really about being a tenant or a landlord. If someone plays a gamble with their purchase, there is a good chance that they may struggle if things don't go their way. Why don't people struggle while throwing insane price offers standing in home auctions? And then they start struggling when the interest rates go up?

        The same can be said for some tenants for their financial management.. Obviously not everyone is struggling as everyone didn't go rogue with their money.

        • bobolo on 03/05/2023 - 14:11
          -2

          I feel like this is modern day Darwinism at work

          Its always been a "survival of the fittest"

          In the caveman days when you made decisions callously you'd get eaten by Sabretooth tigers

          In the modern day if you take out big loans without thinking of consequences, you get eaten by the banks

          The only difference is that in the modern day, the "weak" have online platforms to whinge about it

          • virhlpool on 03/05/2023 - 15:22
            +1

            @bobolo:

            The only difference is that in the modern day, the "weak" have online platforms to whinge about it

            Agree. Online platforms are for everyone to whinge though. Looking at the poll of this post, there are more wealthier/ stronger people whinging compared to the poor. haha

  • DarkOz on 03/05/2023 - 08:18
    +5

    Absolutely not feeling the rate rises at all as we couldn't afford a $1m+ mortgage and choose not to over commit into one. People who overextended into a mortgage at record low interest rates only has themselves to blame. It's either greed or FOMO.

    I am glad that the RBA is aggressively hiking the interest rates to reduce inflation. Personally I don't think it's aggressive enough. It's still at 7% and won't drop down to 2-3% target range until 2025. Had the RBA not increase interest rate aggressively the inflation rate would have been hovering at around 5%-8% for years. That would screw up the whole economy and hurt everyone especially the poor and the less fortunate.

    • idonotknowwhy on 03/05/2023 - 09:29
      +1

      +1 They should have raised more aggressively. I'd rather they truncate the high inflation window.

    • RocketSwitch on 03/05/2023 - 15:28
      +1

      It's mostly the RBA's fault for this mess.

      They kept on reducing the rates, gave people false hope and then continued to increase rates at small amounts without giving time for the previous rates to have an impact.

  • bobolo on 03/05/2023 - 09:27
    +2

    Honestly, if you got a massive loan to buy a house when rates were 2% or less expecting it to stay like that for 30~ years, you kind of deserve the pain

    • virhlpool on 03/05/2023 - 12:10
      +1

      100%. I won't blame anyone for that.

  • Dack Smith on 03/05/2023 - 12:44
    +1

    Many People are still spending like no tomorrow on discretionary items like Tesla cars, cruises, overseas trips and expensive luxury items and paying out of their asses for housing.

    So no - the rates could rise to 7% and most OZB peeps other than me and the poor wouldn’t feel a thing.

    It’s up to the government and the the RBA to keep raising rates until Australia goes into a depression.

    Or when high end GFX card sales start to drop I suppose

    • sss333 on 03/05/2023 - 12:57
      +1

      Yeah spending overall is still high
      Record luxury car sales last month
      https://twitter.com/CommSec/status/1653585109680009216

      Also seeing record AFL and NRL attendances this season
      https://twitter.com/footyindustryAU/status/16525974223240765…

      People who planned to travel during the lockdowns now using those savings to go now

      • virhlpool on 03/05/2023 - 13:45
        +1

        Insane.. It's funny how media keeps complaining against the rate hikes and society at large too but still people (some of us included) keep spending so much.. pain is hardly to be seen anywhere really! Look at the poll of this post and the comments - hardly anyone in any major pain. If this continues, the rate will need to go up higher.

  • Drakesy on 03/05/2023 - 13:09
    +4

    I love how the media are blowing up the RBA when in reality the RBA have barely scraped the surface. House prices are out of control and low interest rates are fuelling investors. Bring on 5+%

    • virhlpool on 03/05/2023 - 13:49
      +2

      Yeah.. and no one seems to talk about it. Media and banks won't talk much about it either since it's mostly against their vested interests.

  • Trying2SaveABuck on 03/05/2023 - 13:29

    I understand we need to 'get inflation under-control' but the system seems to be a one-trick pony moving the cash rate seems like a scorched earth approch

    sure there are other affective ways to bring down inflation in the key areas then screwing morgage holders?

    I mean surely the older generations who dont have home loans and milking the HISA and spending a bucket loads in the current climate

    • virhlpool on 03/05/2023 - 13:39

      sure there are other affective ways to bring down inflation in the key areas then screwing morgage holders?

      Why is it screwing? Mortgage interest rate was never supposed to be 2% forever. If you look at the historic trend of the interest rate in Australia, we are still in a lower side of the spectrum despite the hikes. RBA is only trying to get it to the normal levels after keeping it way too low for 2-3 years to boost the economy during pandemic.

      Borrowers should have thought twice before taking huge loans and banks should have assessed them more stringently. People who don't think well when throwing offers at the home auctions may face issues later on when the reality hits.

      • Trying2SaveABuck on 03/05/2023 - 13:55

        Why is it screwing? Mortgage interest rate was never supposed to be 2% forever. If you look at the historic trend of the interest rate in Australia, we are still in a lower end of the spectrum despite the hikes. RBA is only trying to get it to the normal levels after keeping it way too low for 2-3 years to boost the economy during pandemic. Borrowers should have thought twice before taking huge loans and banks should have assessed them more stringently. People who don't think well when throwing offers at the home auctions may face issues later on when the reality hits.

        this is incredably 'harsh' assessment - people that took 'large loans' did so becuz they 'didnt really have a choice' the average house price in Melbourne (713k) and Sydney (1.03m) - is largely sweked to the lower end of the scale id say most houses easily sell for over 1.5-2m….even if you are a high income earner you will struggle to buy a home outright without help

        Id add in that almost everyone within the age range of 'buying' their 1st home would never have seen interest rates meaningfully rise and prioerty do anything by skyrocket - Im sorry but to tall poppy and say 'you should of thought twice' is pretty short sighted when the RBA governer hitted interest rates would be low for at least years

        but ill point to you the 'borrowers' are not the ones suffering the most it is 'actually' renters as the rental market has no vacency and cost of rentals is skyrocketing

        personally speaking i dont owe much and my investments from other property and shares cover all my costs but i am fully aware not everyone is in my situation and the economy is going down the toilet despite all the pain home loan holders are facing and have faced

        • virhlpool on 03/05/2023 - 13:58
          -1

          this is incredably 'harsh' assessment - people that took 'large loans' did so becuz they 'didnt really have a choice' the average house price in Melbourne (713k) and Sydney (1.03m) - is largely sweked to the lower end of the scale id say most houses easily sell for over 1.5-2m….even if you are a high income earner you will struggle to buy a home outright without help

          Let's play fair here. Isn't it 'harsher' when the cautious and sensible borrowers can't enter the housing market as they genuinely see the risk looking at the insane house prices? Isn't it sad that no one talks about this harshness they go through because some people drive the prices up by making a rogue assessment of their repaying capability? I must say banks are equally to be blamed here.

          As a renter, I would rather pay $100 more a week in rent than paying $2000 higher loan repayment a month because I bought my dream house at $1.5m when I could only afford $1.2m in reality. On a brighter side, at least paying $100 more in rent for a couple of years may bring down the prices to some sane levels so the tenants could enter the housing market in near future. I do have a manageable loan but I am saying what I genuinely think.

        • bobolo on 03/05/2023 - 14:07
          +1

          Plenty of affordable housing in all capital cities including Melbourne and Sydney. A first home buyer who is typically on the lower end of the income spectrum should not be targeting median houses anyway. They should be starting off in affordable hoyusing pockets and work their way up over the years. Its what people have been doing for centuries - high or low interest rates. But we live in a society where everyone wants everything "now", and as soon as there is a window to get it, they do it without thinking of the consequences

          • virhlpool on 03/05/2023 - 14:08
            +3

            @bobolo:

            Plenty of affordable housing in all capital cities including Melbourne and Sydney.

            Come on now, we know it all. It's a joke. Affordable $1m townhouses where you don't get your window glasses broken by teenagers in the night? Not all families can fit in so called 'units' given their shrinking sizes (thanks to councils and developers' greed).

            • bobolo on 03/05/2023 - 14:15

              @virhlpool: I think that theory is overexaggerated. I am not suggesting all first home buyers must buy in Mount Druitt or Broadmeadows. Plenty of other suburbs without perceived high crime rate (and I stress the word perceived because in reality, this stuff doesn't tend to happen as much as you think even in "poorer areas").

              Most families can fit in units by the way. Plenty of 3 or 4 bed options in affordable housing areas. If you have a larger family then that and you are a low income earner, then again you made a pretty bad decision by having tonnes of kids.

              • virhlpool on 03/05/2023 - 14:37
                +1

                @bobolo: Look at our hypocrisy now. How is all this struggle to find affordable housing not 'harsh' to the cautious and sensible buyers, and yet the pain (hypothetical, in reality there's hardly any pain yet) faced by the people who bought multi-million dollar homes without actual affordability with interest rate hike is termed as 'harsh'? If the latter is harsh, then the former is harsher.

                • Trying2SaveABuck on 03/05/2023 - 15:07

                  @virhlpool:

                  Look at our hypocrisy now. How is all this struggle to find affordable housing not 'harsh' to the cautious and sensible buyers, and yet the pain (hypothetical, in reality there's hardly any pain yet) faced by the people who bought multi-million dollar homes without actual affordability with interest rate hike is termed as 'harsh'? If the latter is harsh, then the former is harsher.

                  both are 'harsh' the difference is there is support for people who cannot afford housing ie social housing

                  there is no support if you have to choose between paying your home loan and paying for food

                  to be honest the only hypocrites i see are those who dont recognise this as a mass issue - we do not have 30 year fixed loans like in Europe and the US to say the current situation is anything but harsh on recent home owners is down right evil

                  It doesnt 'phase' me much but we got be look at the facts people here are struggling after saving and working hard to get into their own home whilst there are others who have milked the system of social housing for decades (which we need more social housing) and are unaffected

                  personally i think there should be support for both home owners and those unable to buy there own home but im not a hypocrite or a tall poppy

                  • virhlpool on 03/05/2023 - 15:10

                    @Trying2SaveABuck:

                    both are 'harsh' the difference is there is support for people who cannot afford housing ie social housing

                    If you seriously believe this, then you don't know ground reality. There are people who are in queue for social housing for more than 10 years. State of social housing is another story all together.

                    • Trying2SaveABuck on 03/05/2023 - 15:11

                      @virhlpool:

                      If you seriously believe this, then you don't know ground reality. There are people who are in queue for social housing for more ?than 10 years. State of social housing is another story all together.

                      The supply of social housing is obviously not enough but this is 'another' issue all together

                      people who are on the brink losing there home have 'tried' to there best to do the right thing and are being punished for it they have no '10 year wait list' they will simply lose it all

                      which i would argue is way more harsh

                      • virhlpool on 03/05/2023 - 15:14

                        @Trying2SaveABuck: And no blames to the people/ stakeholders responsible for jacking prices up to these insane levels in the first place?

                        • Trying2SaveABuck on 03/05/2023 - 15:16
                          -1

                          @virhlpool:

                          And no blames to the people/ stakeholders responsible for jacking prices up in the first place?

                          …. we have a PM with 5 houses and the RBA governor who has poorly handed the cash rate is still in the job….

                          people made their choice….

                          In Victoria the premier promised more 'social housing' to axe it 3 weeks later….

                          • bobolo on 03/05/2023 - 15:26
                            +2

                            @Trying2SaveABuck: The RBA governor has not poorly handled the cash rate. There are equally, if not more people who support the rate rises as those who don't. Inflation is a disease and will hit low income earners the hardest. It must be contained. Economy is not just about house prices and affordability.

                            You have to remember that only a small minority of the population have mortgages, and even smaller are the ones who overextended themselves.

                            Get your head out of mainstream media and you will see this pretty clearly.

                            • Trying2SaveABuck on 03/05/2023 - 16:05

                              @bobolo:

                              The RBA governor has not poorly handled the cash rate. There are equally, if not more people who support the rate rises as those who don't. Inflation is a disease and will hit low income earners the hardest. It must be contained. Economy is not just about house prices and affordability.
                              You have to remember that only a small minority of the population have mortgages, and even smaller are the ones who overextended themselves.
                              Get your head out of mainstream media and you will see this pretty clearly.

                              LMAO i think you got stop with the media bloke

                              2-3% inflation isa made up number from a NZ econmist there is no evidance or data to support it - thus i 'agree' high inflation is bad but is 7% 'actually' high inflation - Australias long term average is 3-4.5% and we have had a long period of sub 3% inflation so a 'few' years of slightly higher inflation is probably just the market correcting itself.

                              the fact you have such a shallow and poor understanding of economics to back up your clueless point of view if the issue here

                              The RBA has done a poor job - the increasing of the cash rate 13 in 15 months is the equivalent to turning the tiantaic by dropping the anchor the amount of damage they have done is unforgivable - they should of rose the Cash rate 6-8mo ealier it would of been a steadier tranisition and given people less of a 'shock ie we should of seen 13 rises over 3 years (perhaps larger rises) the fact it has eventuated like this is poor management and planning

                              Our federal government is not blameless they have stupidly opened the immgration flood gates and increased the min wage in a time when we are in 'higher' inflation which has surely added fuel to the fire - but the 'media' will never tell you that esp the ABC

                              • bobolo on 03/05/2023 - 16:47
                                +1

                                @Trying2SaveABuck: Have you been to the shops recently? filled up your car? checked your insurance policies and bills? This is the evidence for inflation.

                                No, the RBA has not done a poor job. We started from such a low base if anyone thought <2% rates were "normal" they need to get a reality check (i'm sure they are now). Even with all these rate rises, interest rates are still well below where a relatively healthy economy should be at

                                Wah wah wah immigration. This country is built on immigration. Another copout excuse for those who were naive enough to think historically low interest rates were the norm and made financial decisions accordingly. Ofcourse they love to blame everyone and everything else except for themselves

                                • Trying2SaveABuck on 03/05/2023 - 16:55
                                  -1

                                  @bobolo:

                                  Wah wah wah immigration. This country is built on immigration. Another copout excuse for those who were naive enough to think historically low interest rates were the norm and made financial decisions accordingly. Ofcourse they love to blame everyone and everything else except for themselves

                                  it was it was built on around 35-70k intake pa not 900k - lmao

                                  But dont let the facts get in the way of your agenda

                                  • bobolo on 03/05/2023 - 17:02

                                    @Trying2SaveABuck: source? (I know migration stats well so I know your numbers are full of s**t). Cool facts bro

                                    also don't cherry pick your "facts" to fit your agenda either

                                    • Trying2SaveABuck on 03/05/2023 - 17:03
                                      -1

                                      @bobolo: google immgration was capped at 75k Howard ruud boosted it 200k it has been climbing since then

                                      we have been going backwards since then

    • node modules on 03/05/2023 - 14:25

      Cash rate is usually the one-trick pony. The problem is that the hikes aren't big enough. Shouldn't mortgage holders be aware of the interest rate risk before entering into a mortgage?

      • Trying2SaveABuck on 03/05/2023 - 15:59

        Cash rate is usually the one-trick pony. The problem is that the hikes aren't big enough. Shouldn't mortgage holders be aware of the interest rate risk before entering into a mortgage?

        the loans are stress tested the issue is the stress test was over passed 5 hikes ago….

        • virhlpool on 03/05/2023 - 16:03

          the loans are stress tested the issue is the stress test was over passed 5 hikes ago….

          Lots of malpractices and ignorance go on in loan documentation.. Stress tests for a 30-year loan cannot be at 2% if the current loan rate is 2%. If the stress test was done at 6-8% and people genuinely passed it, then they shouldn't complain today or not be afraid of rate hikes.

          • Trying2SaveABuck on 03/05/2023 - 16:07

            @virhlpool: i think (im not an expert) the stress test was if you had to pay 2.5-3% more then the current rate you were offered which would be equivalent to 10, 25 point rises we have has 13 rises in which 8 of them were 50 points (not 25)

            im pretty sure this stress test has been used for a long time, never in Australia history has interest rates moved up or down this fast no one could of forseen such a change….

            literally no one could of been as risk adverse as the tall poppies are suggesting

            • virhlpool on 03/05/2023 - 16:11

              @Trying2SaveABuck: If such massive, mega-banks couldn't do stress tests wisely/ correctly and let people borrow these huge, 30-year loans like nothing, then there's something wrong with our banking system. I remember, in my late 20's I was offered a loan of $1m after all so called 'stress tests' and it took me aback. No way in the sane world I was able to make the repayment required for that loan with my given income. For the lending team, I was a 'business' and they had incentives linked with this business. Enough said.

              • Trying2SaveABuck on 03/05/2023 - 16:17

                @virhlpool:

                If such massive, mega-banks couldn't do stress tests wisely/ correctly and let people borrow these huge, 30-year loans like nothing, then there's something wrong with our banking system

                im not 'dis-agreeing' with you im just telling you how it is - the 'dream' of owning ones own home has been a more and more difficult dream as the generations go on (in Melbourne and Sydney mainly)

                for more younger people we have never seen a down turn (as an adult), never seen more then a hand full of changes to interest rates rising or falling - i am a millenial in a comfortable position but i feel for those who brought a house (in the last 36mo) in a system that was already stacked against them only to have the difficulty dialed to 100 shortly after they got the keys. The scarey part is the banks have the ruthless power to take your home from you and everyting you have worked hard for could be gone if you fall a 'few' months behind…..

                I mostly blame the government as they set the rules for the corrupt and overly greedy banks but unfortnetly it is what it is

                But honestly my reponse to anyone who says 'you/they should of seen this coming' needs to f—k right off no one saw this coming - and if you did you would of had 'puts' on the gold market and make millions/billions

                • virhlpool on 03/05/2023 - 16:21

                  @Trying2SaveABuck: I hear you totally.. but I hardly see the pain that you seem to be talking about, which is the whole point. The vast majority of the people are paying insane house prices even today, as we write this, by taking big loans. Majority of the people are splurging money on lifestyle, holidays and cars.. unaffected by increase in the cost of living. If this poll isn't a good enough sample for you, just look around yourself. This makes RBA believe that the rate isn't enough to bring down inflation. Look at the weekly auction results. Where is the pain really anywhere in Australia for that matter? If anything, people have been paying 3-5% more in last two months alone than they did two months back. None of these is any sign of the pain. Contrary to it, it shows the buoyancy of the economy and market.

                  • Trying2SaveABuck on 03/05/2023 - 16:26
                    +1

                    @virhlpool:

                    but I hardly see the pain that you seem to be talking about. The vast majority of the people are paying insane house prices even today, by taking big loans. Majority of the people are splurging money on lifestyle.. unaffected by increase in the cost of living. That makes RBA believe that the rate isn't enough to bring down inflation. Look at the weekly auction results. Where is the pain really anywhere in Australia for that matter? If anything, people have been paying 3-5% more in last two months alone than they did two months back.

                    your comparing apples with bannas

                    People who brought in 24mo ago probably expected rates to rise but over 4-6 years (or i hope they at least considered a few rises otherwise they are mega screwed)

                    people buying know are probably not expecting much of a rise (maybe 1 or 2 more hikes) so they are in a postion to buy with that future mind set (or at least you hope they are)

                    I agree people are spending money like crazy (not me)

                    i own houses and (i guess) would be considered a high income earner i have cut back on a lot of things mostly becuz i want to be in a position to purchase property if the system brakes (like people did post GFC in the USA)

                    I dont like the system but i also understand how it works and facts are those 'with money' are in a position where might might be financially rewarding to deploy it when/if shit hits the fan

                • Hearthstone on 03/05/2023 - 17:06
                  +1

                  @Trying2SaveABuck: it just common sense you don’t need to see anything coming when I took out a loan 600k in 2013 I factor in rate at 7-8% using long term average … I could borrow more but I can’t afford it If rate goes to 8% and I will be struggling so I settle for less

                  • Trying2SaveABuck on 03/05/2023 - 17:19

                    @Hearthstone: if was 'common' sense the loan stress would be at 7-8% would you not agree?

                    clearly it is not common sense it is hindesight has 20/20 vision

                    • Hearthstone on 03/05/2023 - 21:16
                      +1

                      @Trying2SaveABuck: when you take out a loan it is your responsibility to gauge yourself what you can afford and test various scenarios should shit happen, you could be out of work, rate rise, how much buffer you have etc…

                      it is not the banks job, banks just run basic stress test so they are comply with APRA rules, they are not there hold anyone hand and work out various scenario for them.

                      they have security over your house that their stress test, if shit happened they takes your properties
                      if they stress test they cant have a holding on your properties they don't lend you the money.

                      it is wise for borrower to do the same, if shit happened you don't lose your house

                      • Trying2SaveABuck on 03/05/2023 - 21:21
                        -1

                        @Hearthstone: i agree with the point you're making but 'that is exactly' what is happening…..

                        ill clarify - people struggling have the 'right to complain' - i think people are wank for saying 'well its your fault you should of cystal balled this situation'

                        but i dont think anything should really change for the current loan holders - my point is more interest rates should not be swinging 200points in 4 months…. the fact the RBA has not had major sackings imho is a joke

                        if a private company was this badly run the CEO would be gone and a full restructure would need to occur

        • node modules on 03/05/2023 - 20:43
          +1

          Shouldn’t mortgage holders know that interest rates could exceed the stress test rate ?

          • Trying2SaveABuck on 03/05/2023 - 21:10
            -2

            @node modules: in the history of Australia how many people have taken a loan and have had it exceed the stress test level in 12 months? id even go and say how many people have taken a loan and had the stress test level exceeded in 3 years? now how many people have had the stress test exceed to the point of 'double the stress test' in 15 months that is what the current rate rises have done to ppl….

            after you answer that contrast the stupidity of your previous comment with this - there is a chance i could 'win powerball tomorrow' however i dont keep a letter of resignation in my work bag

            it is not an impossible thing to happen but it is incredably unlikely - if anything there was way more possibility house prices would go up to a point they couldnt afford to enter the market base on how house prices have gone since 2010 we have seen crazy levels of growth that has out stripped savings and wage growth….

            i find it amazing the sheer hypocrital views of people when it comes to property

            • node modules on 04/05/2023 - 11:21

              @Trying2SaveABuck: Hello @Trying2SaveABuck, I hope this message finds you well. The difference is that with your Powerball/letter of resignation example, you don't put a significant amount of assets on the line.

              Besides, who keeps a hard copy of a letter of resignation these days? You can just ChatGPT one in two minutes then email it. And do you prefer Powerball over Lotto?

              What are some examples of hypocrisy you have seen with regards to property?

  • aedeau on 03/05/2023 - 13:52
    +1

    yes, i am feeling it. we only have 1 tesla in the garage not 2 (true story), was considering a model y. will probably stick with the old hilux now until I get that class action payout then offload it. also pulled some discretionary spending, which means buying less lego 'investment' sets.

  • RocketSwitch on 03/05/2023 - 15:31

    RBA shouldn't have made any comments that could be considered financial advice. They misled people. Now, have no idea what they're doing. What does a guy on $1m know about hardship? All you guys commenting as if you want people to suffer, what's wrong with you?

    The people feeling the impact of this are those that were just getting by before the rise.

    Then these guys hit everyone with the highest rate rises in 11 years. Blamed COVID and the war, but we all know inflation was corporate-driven greed. But let's use the BS narrative to convince those without a brain. Now they know, they took the COVID pill, we locked them in their houses for years, we can do anything and they will believe everything.

    I'm not feeling it, I make enough, but I do feel for those just getting by.

    • virhlpool on 03/05/2023 - 16:07
      +2

      Who's (and how many are) struggling anyway? Look at the polls of this post.. look at the home prices people are willing to pay even today. Look at how people are splurging money on everything despite it being at inflated prices.

      And, whose mistake is it to overpay or over-borrow? You can't blame RBA or govt for this. Blame the banks who lent and blame the borrowers who borrowed beyond their means. Not everyone did that. If everyone had done it, market wouldn't be so buoyant today. If RBA wasn't considerate enough for the people and the economy, it would have gone much more aggressive with the hikes which, in fact, has been the need of the time.

      • RocketSwitch on 03/05/2023 - 17:36

        Feb 23, 2023: Nearly 70 per cent of borrowers are worried about mortgage repayments as consecutive interest rate rises continue to impact homeowner budgets.

        69 per cent of homeowners are worried about meeting their mortgage repayments.

        Parents and people under the age of 44 experienced the biggest impacts, with 79 per cent of these groups having adjusted their household budgets, compared to the national average of 71 per cent.

        83 per cent have to access savings to cover an extra month's mortgage repayment.

        You can blame the RBA as they aggressively sent it to almost 0% and told people we won't be rising it any time soon.

        The banks have always allowed people to borrow beyond their means, where's the regulation in that? But the RBA created that narrative to buy before blasting the rate back up!

        • virhlpool on 03/05/2023 - 18:06
          +1

          The banks have always allowed people to borrow beyond their means, where's the regulation in that? But the RBA created that narrative to buy before blasting the rate back up!

          You said the truth about state of our 'great' banking system in the first sentence and yet you hardly see any uproar against them.

          RBA never created any narrative. Were the borrowers sleeping when committing to insane loan amounts for 30 years? Media, don't give us a crap that they weren't smart enough to know what they were committing to.

          Again, I am not saying that people shouldn't have taken loans. But you can't be borrowing till your neck and then complain when you lose a job or interest rates go up. That's not how 'loan' works. Even today some people must be paying insane house prices and borrowing crazy amounts, beyond their means, so it's not the phenomenon of the past that we are talking about.

          • RocketSwitch on 04/05/2023 - 09:46

            @virhlpool: I agree with you, but you're giving people far too much credit than they deserve, they're not as intelligent as you think.

            The RBA is in a position of power, they can move currency with what they say, they have an impact and people look to them for advice. They led many Australians to believe it wouldn't raise rates until 2023 or 2024. So that could have given people the confidence to get that loan that they might otherwise not have. Dan Andrews confirmed today that was also the advice the government got!

            • virhlpool on 04/05/2023 - 10:10

              @RocketSwitch: RBA or whoever can say whatever. If I know that I don't deserve a $1m loan over 30-years based on my repayment capacity, then I wouldn't take it. Why would I get excited participating in auctions and throw price offers which are beyond my means? I should have struggled doing it then, not now! And yet, they have no problems with huge loans at a low interest when prices keep going up.. There was a long enough time to realise the issue or mistake as you may call. Even today most of those properties would sell at a decent profit or no loss at least. It's not too late to act, ay.

              • RocketSwitch on 04/05/2023 - 15:40
                +1

                @virhlpool: Yeah, that's a good point, it's not all lost if they sold and then got something within their means. Best solution.

        • Debt Free on 03/05/2023 - 18:45
          +2

          @RocketSwitch you state “83% have had to access savings to cover an extra month’s mortgage repayment”, as if they shouldn’t? Are you for real?

          • RocketSwitch on 04/05/2023 - 09:41

            @Debt Free: Not sure I understand what you're saying. Do you understand how it works? Do you understand what that means?

  • Debt Free on 03/05/2023 - 18:34
    +2

    Media tried to stop Reserve Bank from rightly hiking interest rates to curb inflation. You can’t expect to profiteer from your bargain buys bought with other people’s money, at no cost to you forever. Pay for your own purchases finally. I’m sick of inflation and house prices continuing to rise.
    Thankyou to Reserve Bank for not falling for the ignorant full on media pressure trying to stop the Reserve Bank from doing the right and necessary thing.

    • virhlpool on 03/05/2023 - 18:35
      +1

      Golden words, mate. I hope RBA maintains the stand and momentum until the mess is cleaned up. It's been 3 years of insanity now; finally I see some rays of light.

      I doubt it though, since the media and the 'stakeholders' will do everything possible they can to stop RBA and protect the Ponzi scheme or the bubble as you may want to call it.

  • Dogsab on 03/05/2023 - 20:04
    +1

    My view is that people who have home loans are actually doing ok at the moment as most borrowers being on interest rates lower than the inflation rate means they're essentially getting paid to have borrowed money. Those of us trying to save for a house deposit are stuck with interest rates less than inflation which means our money is devaluing. Sort of sucks that I also get the double whammy of 7% CPI indexing on my HELP loan although I appreciate that won't be long-term.

    Please tell me if I am looking at this the wrong way.

    • virhlpool on 03/05/2023 - 20:40
      +1

      My view is that people who have home loans are actually doing ok at the moment as most borrowers being on interest rates lower than the inflation rate means they're essentially getting paid to have borrowed money.

      Not for too long. This quarter and the next quarter a very big chunk comes off low fixed rate to a variable high rate.

      Those of us trying to save for a house deposit are stuck with interest rates less than inflation which means our money is devaluing.

      This is true but on a positive side (for you), IF house prices fall or remain stagnant for too long and you happen to buy after a year or two, you aren't missing out on anything. On the contrary, you are saving the hefty interest amount that you would have paid in that duration. This is a total guess - I am not sure how the market will play out. This situation is very likely for the next 2-3 years though, in which case the annual interest payment on loans will remain far higher than the price increase of that property (if any) in the same duration, which means you will be in net negative even if you minus your usual rent expense from the interest payment, for the calculation sake.

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