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One-off rate hike? Or more to come?

Discussion in 'Property Finance' started by acorn123, 27th Jul, 2015.

  1. acorn123

    acorn123 Well-Known Member

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    Just wonder whether this is not just one-off shoot from banks/ARPA:

    1. a 0.29 rate hike will not cool down the hot market or deter investors in general
    - No effect on “rich”, as they are mostly bullet-proof
    - No effect on “poor”, as they are unable to get a loan anyway
    - Some effect on “middle class”, especially, who borrowed to ceiling, such as teachers, taxi drivers etc.

    2. Will ARPA enforce 80% LVR for all investment loans soon, if this shoot is not effective? or something tougher?
    3. Psychologically, some investors might think twice for next purchase, given these uncertainties.
    4. House price in some regions might be more or less affected? Such as Brisbane? Will not expect a fast growth in a short time frame? Or party time is almost over?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Could be more to come if the effect is minimal.
     
  3. Arashi87

    Arashi87 Well-Known Member

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    And usually how long we can see the in effect Terry?:cool:
     
  4. WattleIdo

    WattleIdo renovating Premium Member

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    Teachers and taxi dri v ers don't borrow to the max. :rolleyes:
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    unchartered territory
     
  6. Vacant

    Vacant Well-Known Member

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    What's this going to do to rent prices? In my experience, investors don't like to be out of pocket so they generally pass the cost on. Seeing as this is across the board can we expect to see rents start to rise?
     
  7. willair

    willair Well-Known Member Premium Member

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    0.29 will not do nothing,if people are starting to worry about rates then maybe property investing is not for you,people use the banks but they start to get upset when the bank and the stake holders use them
    and a lot of rich people these days are rich on paper values -opm..no-one is bullet-proof..
     
  8. Bullion Baron

    Bullion Baron Well-Known Member

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    One bank analyst has said there is more to come: http://www.abc.net.au/news/2015-07-21/home-loan-rule-changes-could-push-up-rates/6637598
    & if they are focusing rate increases on part of their loan book (primarily investors), then I guess it could end up being more.

    I expect it will be offset by further official rate cuts though.
     
  9. DanW

    DanW Well-Known Member

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    If they are passed on to investors...

    We are taking short term fixed on a couple of properties before the changes to mitigate some cost risk.
     
  10. tobe

    tobe Well-Known Member

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    29 points is only 22 to someone on a 30% marginal tax rate.....
     
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  11. acorn123

    acorn123 Well-Known Member

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  12. Blacky

    Blacky Well-Known Member

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    Being keen to buy, and being able to get the finance to do so could be two very different things.

    If the measures work, I think it opens the door for more rate cuts - although I doubt investors would see much of it.
    They (regulators) are battling with a scenario of a relatively poor economy overall, with a booming property market. Dropping rates is going to fuel property, but do little else.
    If they can get this balance right they hold property values steady, and give the economy the kick in the arse it needs.

    Blacky
     
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  13. chylld

    chylld Well-Known Member

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    IMO point 2 (LVR restrictions) and new serviceability requirements will have a dramatically larger impact than point 1 (rate hikes)
     
  14. acorn123

    acorn123 Well-Known Member

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    Agreed.They may require property investors to put a 30% deposit for any new purchase at some stage if house price is not controlled to some extent (say, +5%/yr?).
    After this rate hike and the 80% LVR constraint, it is still the best time to build up a large profolio for some investors, given the rate is historically low and there are still cheap loans around.
    By the way, if 15% GST kicks in (sooner or later), both house price and rate may go up (?).
     
    Last edited: 31st Jul, 2015
  15. Angel

    Angel Well-Known Member

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    One little positive - when I come off fixed later this year, the new rate for the IPs will still be lower than it was fixed. We are so poor that when I tried lowering the interest rate last year at Suncorp, they made us close the LOC and open a standard P&I as owner occupiers.

    Edited coz this is a fixed loan too.
     
    Last edited: 1st Aug, 2015
  16. jins13

    jins13 Well-Known Member

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    I am expecting more increases and restrictions to come. As some of the other mentioned with relevant links, these increases are not really making much of a dent at the moment. Just needs some more push.
     
  17. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hey All,

    I honestly think rates will go up even more and I would be surprised if PPOR loans increase as well. The reason why I say this, is that banks tend to calculate loans at a 7% + level when working out serviceability for loans. So even with a .50 increase most people should be ok.

    I think its fair to say that rates will head up!!!
     
  18. Fargo

    Fargo Well-Known Member

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    A 0.29 interest rate increase wont make any difference, it doesn't really matter, the banks calculate your affordability at 7% anyway. The rate makes no difference if they wont lend money.