Result of high interest rates...??

[radha08]

Hmm interesting...i know australia interest rates are very high 6 to 7% for house loan...could this be the outcome....

http://www.propertyguru.com.sg/prope...e-mortgage-str

Nearly 20 percent of first-time home buyers in Australia could lose their homes in the coming months, according to an Australian Mortgage Stress Analysis Survey.

The study, which surveyed 26,000 households, found that the number of young home buyers in severe mortgage stress is set to surge, with many families at risk of being forced by lenders to sell their properties.

Households in Tasmania are most at risk with 17.2 percent of borrowers either late on their loan payments, forced to refinance, or pressured by lenders to sell. This is followed by the Northern Territory (17 percent), South Australia and New South Wales (both 16.4 percent), Queensland and Victoria (both 16 percent), ACT (15.2 percent), and Western Australia at 14.4 percent.

Digital Finance Analytics (DFA), the research agency that conducted the report, said the crisis is attributed to budget mismanagement and rising household costs.

“They don’t know what their incomes are or their outgoings are and they don’t have the money to maintain their lifestyles,” said Martin North, Director at the DFA, adding that 50 percent of households surveyed had no proper budget to cope with expenses.

[leesg123]

Loan approval here got credit and income checks. Dont know about aussie bank how stringent they are.

[radha08]

Loan approval here got credit and income checks. Dont know about aussie bank how stringent they are.

yup that could be a reason...maybe autralia just too big to control...

[Kelonguni]

Well, I would take greater heed of this interest rate factor.

Everybody has done this before but let's just examine it again. Assuming 30 year loan with different interest rates at 500,000 loan:

Interest 1% Total interests when settled 78,951 (578,951), Monthly 1608
Interest 3% Total interests when settled 258,887 (758,887), Monthly 2108
Interest 7% Total interests when settled 697,544 (1,197,544), Monthly 3326

For 7% interest rate (sustained over 30 years), the final interests paid can even be higher than the amount loaned. Fortunately, this should not be the case. Over long term, 3-4% is more likely. The Australia situation is for those who take up the maximum possible loans, only to see the monthly payment increase tremendously, possibly double.

Note that for those who loan double i.e. 1 million, everything doubles in the conditions above.

Its not whether the rates will rise, it's a matter of when. My own directive is still quantum, quantum, quantum...

[Ringo33]

It is common for Australians to take up interest only mortgage whereby they only the interest, and no capital repayment.

[phantom_opera]

It is common for Australians to take up interest only mortgage whereby they only the interest, and no capital repayment.

that is scary another subprime in the making ... once resource boom is over ... it is GAME OVER

according to this debt clock, Australian's debt is increasing at 1k/s ... 3.6m per hour

http://www.debtclock.com.au/

still .. it is pale in comparison with the US version, which is probably increase 50x faster, now u know why it has to print 100x faster

http://www.usdebtclock.org/

[radha08]

Well, I would take greater heed of this interest rate factor.

Everybody has done this before but let's just examine it again. Assuming 30 year loan with different interest rates at 500,000 loan:

Interest 1% Total interests when settled 78,951 (578,951), Monthly 1608
Interest 3% Total interests when settled 258,887 (758,887), Monthly 2108
Interest 7% Total interests when settled 697,544 (1,197,544), Monthly 3326

For 7% interest rate (sustained over 30 years), the final interests paid can even be higher than the amount loaned. Fortunately, this should not be the case. Over long term, 3-4% is more likely. The Australia situation is for those who take up the maximum possible loans, only to see the monthly payment increase tremendously, possibly double.

Note that for those who loan double i.e. 1 million, everything doubles in the conditions above.

Its not whether the rates will rise, it's a matter of when. My own directive is still quantum, quantum, quantum...

...thats scaring...but looks like NO effect on buyers...in spore

[Kelonguni]

...thats scaring...but looks like NO effect on buyers...in spore

The effect is actually obvious. The interest now is below 1%.

Supposing a day when interests hit 6-7%. We will be able to compare.

But interestingly, there are not many new launches then.

[Allthepies]

when interest rise to 6-7%, good for CPF savers: CPF interest will rise in tandem : )

[indomie]

When productivity is low, there is no reason to pay for high interest. There is a trend that global productivity is in the glut. This period of low productivity and low innovation, your money is simply become lazy and earn less interest for u. As long as there is no new industrial revolution in sight, interest rate will remain low.

[radha08]

When productivity is low, there is no reason to pay for high interest. There is a trend that global productivity is in the glut. This period of low productivity and low innovation, your money is simply become lazy and earn less interest for u. As long as there is no new industrial revolution in sight, interest rate will remain low.

that is why the more news there is on property more people will buy and buy....

[3C]

The effect is actually obvious. The interest now is below 1%.

Supposing a day when interests hit 6-7%. We will be able to compare.

But interestingly, there are not many new launches then.

Touch wood. Hope this day never come. The consequence will be great. If you missed the boat then too bad.