The Reserve Bank warns of serious risks for those who are heavily indebted with limited savings buffers, while painting a generally upbeat picture of the resilience of Australian households as interest rates rise.
This means that for 95 per cent of borrowers, it would take more than a 25 per cent drop in home prices to send them into negative equity, the dangerous position where the borrower owes more to the bank than their home is worth. "Estimates using a model of the housing market that takes into account historical relationships between interest rates and both demand and supply factors suggest that a 200-basis-point increase in interest rates from current levels would lower real housing prices by around 15 per cent over a two-year period," the FSR noted.
If interest rates were to rise by 2 percentage points, which is around the middle of current economist forecasts, the RBA's analysis found 40 per cent of borrowers are already making average monthly repayments that would cover the increase in minimum repayments.
Seriously RBA would not know its arse from its elbow….so out of touch it’s a laugh 🤬🤬🤬🤷♂️
It was always going to happen
. Hilarious! 15% The article itself identifies prices have gone up that much in the past year or two. If you think 15% will be the drop... Well buy another house.
Lol, and the land values that have just gone stratospheric They will come back down right? The recipients of the rates take and land tax will ensure that does not happen.
Caveat Emptor
Will we get to inflate away heavy indebtedness or does it skip a generation.
20 years since a downturn. Sky high house prices and rising rates. Has this ever caused a recession/depression before? Frequently? 80s 90s 08? Just wondering.
you would think inflation would be his 1 job
There’s some pretty good (low) stats showing our Banks have been prudent in lending & people haven’t borrowed excessively You buy a home to live in, to enjoy, not to look at the market value on paper every day. Interest rates are rising globally. Hopefully, wages will start ⬆️
Cryptocurrency is a direct threat to the Federal Reserve Bank, Australia ties its wealth to law via currency, so what happens when a global unauthorized currency replaces it? Wealth is freed, and justice is bankrupted...
The banks are holding back an interest rate rise until after the election. They know it's inevitable
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Source: FinancialReview - 🏆 2. / 90 Read more »