CBA increases rate

Now you are talking...and who said there is no wink wink...collusion between the banks....I think NAB and ANZ will wait will next week....one a week will take the sail out a lot more...because it seems like the news is bad every week. This is what I mean by how it affects people psyche...just like slow torture.

http://www.brisbanetimes.com.au/bus...two-banks-down-two-to-go-20151022-gkfzn1.html

A lot of people there out there are not sophisticated to understand what this means. To me it means the cycle in Sydney is well and truly over...by mid next year.. ..we should see more panick if rates go up again.....in particular where investors bought in droves or people who are over leveraged panick and jump off like lemmings....love it...it happens every cycle.

Like I said before the RBA will now sit on their hands and laugh at how they did not have to do the dirty work.....

 

Lock Ya Rates! 3 Yrs Min.{ If property in Sydney lock rates min 5 years........no CG for a long long time! no mo equity increase)

 

Yep...but would go for 2-3 year rates..cost of getting out of these will be cheaper if you need to...5 yrs is an eternity.

Agree with you about CG...only mad men and Englishmen jump into the Sydney market now...

 

Whilst I understand it also affected OO I find it odd all the recent bash directed at Westpac only, who else will follow etc, media seems to only focus on the big4.

After promoting/pushing their free package for life of loan leading up to EOFY Suncorp then announced on 31st July they were upping their IP rate by 0.27%, effective 31st August
http://www.suncorpbank.com.au/news/suncorp-bank-increases-interest-rates-investor-lending?v=401529

 

All crystal ball gazing from me here...but the housing market is obviously one of the most interest sensitive sectors.

So rate movements would definitely have a demand effect on the market. It could be further deepened by an exaggerated confidence effect associated with uncertainty.

Economic monetary theory has proven (?, depends on how much you buy into the professionals theories) that uncertainty has a greater cost/effect than more certain changes. Independent moves are IMO more uncertain than RBA. The uncertainty associated with these rises (independent moves) would typically mean a bigger economic and incentive effect than a 'priced in' market move from the RBA. These are usually well known/priced in before it actually happens based on data releases.

 

Which I think means APRA have demonstrated they do not understand the law of unintended consequences. Their moves have created uncertainty (and fear and doubt?) and that is never a good thing for economies.

 

Yes, thats true, but their yardstick for success is not the 'impact on GDP' or GDP numbers. Its the protection of the financial system.

They would've known that though and measured the benefits against the costs. Whether everyone agrees or not with the overall necessity and types of moves they made, the one pro is that lending to residential mortgages is more prudent than it has been in the past (safer).

 

Lol - this has become your tagline.

 

APRA caused the bank to increase rate; then the RBA will be able to cut rate again; then the loan rate will remain stable, then the property market will be stable, but the economy will be stimulated by the even lower interest rate. In my humble observation.

 

Well and I thought the RBA drove monetary policy,how wrong was I than..

So if banks drive up rates independently of the RBA policy what relevancy does the RBA have than,especially in the investor borrowing segment??

 

I agree with this ....APRA are staffed by people who belong in academia.....blind freddy would have seen this coming. Imbeciles at best.....ASIC are not better....

 

I wouldn't be surprised if the RBA have even encouraged the big banks to increase rates, perhaps hinting that there would be no opposition coming from them and very little from the pollies. RBA has been stuck between a rock and a hard place for a while now with the no. of investors active in Sydney but so many places doing not much at all.
It's still a great time to buy. Still record low interest rates which are likely to stay below 6% for a while. I don't mind that buyers have to cough up a deposit - this will prevent the slash and burn that some are waiting on.

 

Higher rates = more profits! Time to be a shareholder!

 

What do these rate increases mean for OO ? I have no plans to sell in the next 3 years and don't expect any CG in this market. Would I be better off fixing ?

 

Possibly...some rates as low as 3.99% for 2 years fixed....I personally don't like more than 2 or 3 years fixed.

 

Do not fix too long time. Interest rate is something very hard to predict. (You can not beat the bank) And don't underestimate the CG as well.

 

APRA made some terrible comments on the lending industry. They are narrow minded without big economy picture. Dammit!

 

Could all that's happening cause severe panic and bring Sydney down so far that the rest crash with it? Or are we talking just normal correction?

 

I think these interest rate changes are extremely minor. These low double digit basis point changes wont cause many forced sales at all, though it may pull back a few buyers from committing to buy. But investors have been leaving Sydney for a few months already now anyway. I believe OO's are still buying in Sydney and its good for them with less Investors to compete against. Price levels are not increasing stupidly any more.

Sydney is on the slowdown regardless of a small rate hike on basically the lowest interest rates we have ever seen... I think there will be no bust, just a normal correction.

However, Interest rates of around 7% will absolutely kill all market activity in Sydney and people with moderate or high home mortgages would be in severe pain.... this is unlikely to occur in he near future though.

We took out our home loan in 2008 when rates were around 7% and all these cuts since then have simply been icing on the cake, we have kept the repayments high which has severely reduced the PPOR mortgage. It now costs us just $6.50 per day in interest. Just 2 cups of coffee. Yes I could have completely cleared this debt long ago but I'd rather have a few IPs to help grow my wealth.

But anybody who hasnt experienced higher interest rates with a huge mortgage would be in for a shock if they are only just scrapping by right now and rates dramatically rise.

Throw in widespread job losses and that would start forcing sales.

 

I experienced interest rate of 6.35% and that was alright to manage. If it became 7% for all loans, with vacancies than I think I may have to move in with my folks.