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Good times are over for mortgage holders Featured

Good times are over for mortgage holders

ANDREW CARSWELL, JESSICA IRVINE and LEIGH VAN DEN BROEKE     The Daily Telegraph    April 02, 2013

THE party may be over for Australia's mortgage holders, with previous predictions of further interest rate cuts this year beginning to evaporate.

Having enjoyed a blissful period of record-low interest rates, households have been warned not to count on any more cuts in 2013. And if the Reserve Bank is forced to make one last trim to its official cash rate in the coming months, the stimulus will be shortlived - interest rates are widely forecast to rise in 2014.

The Reserve Bank board will meet today to decide its direction. Any movement, up or down, is highly unlikely, according to The Daily Telegraph's board of experts.

In fact, the majority of our nine-member expert panel believe the Reserve is done cutting rates and will soon set about lifting them back into a more neutral setting, courtesy of a stumbling economy starting to find its feet, and increasingly positive sentiments on the sharemarkets.

Chief economist of HSBC Bank Australia, Paul Bloxham, believes a pre-Christmas rate hike is on the cards, followed by another in the new year.

An economist for the Eureka Report, Adam Carr, thinks that rates should be increased by a quarter of a percentage point today and by another full percentage point over the coming year.

"The Reserve Bank cut interest rates too aggressively last year. None of the dramas they, and others, said would happen, did. Instead the economy got stronger and the outlook is great. I think all we're doing is setting ourselves up for inflation down the track. We don't need rates this low," Mr Carr said.

Repayments on an average Sydney mortgage of $350,000 have dropped by over $900 a month since rates rose to 7.25 per cent in 2008, before the global financial crisis delivered its ugly payload.

That slide has allowed Stuart and Bree McGraw to put extra money towards the mortgage on their Picnic Point home.

But the possibility of rate rises within the year will end those extra payments.

"Our required payments on variable are $845 and we've been paying $1600.

"So we've been trying to pump as much money into that as we can to get ahead," said Mrs McGraw.

"But we won't be able to pay that extra money if it increases back to something like 7 per cent."

It's a change managing director of Market Economics Stephen Koukoulas said was inevitable. A strong lift in house prices - Sydney's values are now growing at an annual rate of 2.7 per cent - plus recovery in global growth and consumer confidence has even raised the risk rates could rise a full percentage point in the coming year, he said.

While the majority of the major banks believe there is still room for the Reserve Bank to trim official interest rates, the Commonwealth Bank now believes rates will stay steady at 3 per cent. National Australia Bank was forced to slash its forecast rate cuts last month.

Controversial economist Steve Keen is standing by his call for interest rates to be cut by a full percentage point in the coming year to bring down the value of the Aussie dollar.

"We have to get the Aussie dollar down," he said.

Last modified onTuesday, 11 June 2013 07:40

1 comment

  • Kerry Hay
    Kerry Hay Friday, 28 February 2014 01:09 Comment Link

    I'm a victim of Westpac Bank fraud on my person and suffered a personal loss of over $632,000 since April 1997, because Westpac Bank lied in regards to the terms and conditions within the said contract. Westpac, hence the name "Western Pacific Airlines that purchased the Bank of New South Wales. During the 1980s, Westpac Bank gambled with their customers deposits without their knowledge or consent and suffered a loss of hundreds of millions of dollars and were trading insolvent. When one realizes that our four big banks are called the "legal mafia" and that the bank controls the bench of our court of law within Australia. That's why the bank wants their victims to take them to court because they own and control the judiciary e.g., Jew-diciary and appoint the Judges to the bench too fleece their victims through litigation court cost, because they can never win their lawsuit against the corrupt big four banks e.g., Nab; ANZ; Com; and Westpac Bank bastards. It's a corrupt governance we the people are dealing with here. Take our magistrate courts, the person serving on the bench are all appointed Freemasons just as the Judges are appointed by the bankers, and don't bother calling and reporting them to the police, because our police force is run by the Freemasons, they are all placed in those positions too protect the upper echelon e.g., a level or rank in an organization, in society, etc. We the people can destroy this unconscionable banking system by never doing business with the above cartels, and only borrow from an accreted Building Society or Credit Union not affiliated with the big 4 banks here in Australia. As soon as one puts his or her signature on the dotted line their mortgage is sold to a third party overseas without their knowledge or consent.

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