Speculation over an interest rate cut sees demand for fixed-rate mortgages drop… Love affair with credit putting Australians at risk… PCA CEO: Crackdown on foreign buyers excessive...
Fixed rate demand drop due to possible rate cut
According to an article in Yahoo News, the Australia Reserve Bank are close to cutting the interest rate down to two per cent in an effort to boost the non-mining part of the economy. Despite evidence that the housing market is accelerating, the interest rates would be even lower than they were during the Great Depression. A quarter percentage point cut in rates would save a person with a $300,000 mortgage more than $40 a month. Homeowners appear to be sure the bank will cut with the number of fixed-rate mortgages taken out dropping sharply.
Mortgage Choice chief executive officer John Flavell said less than 18 per cent of loans written last month were for fixed rates. “This sudden drop in fixed rate demand appears to be caused by the fact that an increasing number of borrowers believe home loan interest rates may fall further over the coming months,” he said.
Love affair with credit putting Australians at risk
A study released by the Wesley Mission last week, suggests that an increasing number of households are technically insolvent or in financial stress. The report found spending outstrips earnings for more than one million households, and 44 per cent are in financial stress. A quarter of households in financial stress are those of middle income earners, who make $52,000-$104,000 a year and have been hit by rising property prices, childcare costs and health insurance, according to the study cited in the Brisbane Times.
Adam Mooney, chief executive of Australia's largest microfinance service, Good Shepherd, has observed a growing number of middle class households finding themselves with unmanageable levels of debt driven by aspirations they cannot afford.
"A lot of marketing these days is specifically designed to make people feel like they're not keeping up with the Joneses," he said. "That's a phenomenon around the world – people want the nice home and the nice car and the kids in private schools. At the same time you have big mortgages and a rapid rise in cost of essentials such as utilities and telecommunications. It takes one unexpected event, such as someone getting ill or losing their job, and the debt becomes a problem."
PCA CEO: Crackdown on foreign buyers excessive
The new fees starting at $5,000 for foreign property buyers have been labelled a tax on investments, leading critics to argue that the new policy will fail to ease housing values across Australia.
While he said that the new tax on investments will “raise far more revenue than is needed to do the job”, Property Council of Australia chief executive Ken Morrison claims the fees are excessive.
“These fees are going to raise around $200m worth of revenue. ASIO’s budget is a little over $400m. You certainly don’t need an effort half the size of ASIO just to do compliance on foreign investment rules,” he was quoted as saying by The Australian.
“We certainly wouldn’t want other states to follow that example,” he said. “If we tax foreign investors out of the market, we will have a lot less supply, which of course is a lot less housing for Australians to buy. The federal government has set a dangerous precedent here.”
According to an article in Yahoo News, the Australia Reserve Bank are close to cutting the interest rate down to two per cent in an effort to boost the non-mining part of the economy. Despite evidence that the housing market is accelerating, the interest rates would be even lower than they were during the Great Depression. A quarter percentage point cut in rates would save a person with a $300,000 mortgage more than $40 a month. Homeowners appear to be sure the bank will cut with the number of fixed-rate mortgages taken out dropping sharply.
Mortgage Choice chief executive officer John Flavell said less than 18 per cent of loans written last month were for fixed rates. “This sudden drop in fixed rate demand appears to be caused by the fact that an increasing number of borrowers believe home loan interest rates may fall further over the coming months,” he said.
Love affair with credit putting Australians at risk
A study released by the Wesley Mission last week, suggests that an increasing number of households are technically insolvent or in financial stress. The report found spending outstrips earnings for more than one million households, and 44 per cent are in financial stress. A quarter of households in financial stress are those of middle income earners, who make $52,000-$104,000 a year and have been hit by rising property prices, childcare costs and health insurance, according to the study cited in the Brisbane Times.
Adam Mooney, chief executive of Australia's largest microfinance service, Good Shepherd, has observed a growing number of middle class households finding themselves with unmanageable levels of debt driven by aspirations they cannot afford.
"A lot of marketing these days is specifically designed to make people feel like they're not keeping up with the Joneses," he said. "That's a phenomenon around the world – people want the nice home and the nice car and the kids in private schools. At the same time you have big mortgages and a rapid rise in cost of essentials such as utilities and telecommunications. It takes one unexpected event, such as someone getting ill or losing their job, and the debt becomes a problem."
PCA CEO: Crackdown on foreign buyers excessive
The new fees starting at $5,000 for foreign property buyers have been labelled a tax on investments, leading critics to argue that the new policy will fail to ease housing values across Australia.
While he said that the new tax on investments will “raise far more revenue than is needed to do the job”, Property Council of Australia chief executive Ken Morrison claims the fees are excessive.
“These fees are going to raise around $200m worth of revenue. ASIO’s budget is a little over $400m. You certainly don’t need an effort half the size of ASIO just to do compliance on foreign investment rules,” he was quoted as saying by The Australian.
“We certainly wouldn’t want other states to follow that example,” he said. “If we tax foreign investors out of the market, we will have a lot less supply, which of course is a lot less housing for Australians to buy. The federal government has set a dangerous precedent here.”
