Interest Rates just went up a quarter of a percent.

[Citric GT]

Hopefully the increase in interest rates will be just enough to squeeze some people (who borrowed to the max) out of the housing market...I'll be watching the market like a vulture!

[4Vman]

Originally Posted by Fairlane

Comiserations with the people in debt but theres not much you can do, except pressure your government for tax cuts and welfare increases.

You cant ask for more if you pay less! this is a problem with society, tax cuts mean Govt spending cuts!!!
The current opposition has traditionally lobbied the electorate very successfully on this missconception: "we'll cut tax's and give you better bla bla bla etc.." They end up borrowing money to keep election promises and plunge the country into debt, then they eventually get voted out and the elected party spends the next 10 years paying off the inherrited debt instead of having more to spend on national services and improvements.
Ask for tax cuts, no problems, but you have to accept that there will be less to "go round" as a result.

[SIKXR8220]

Originally Posted by 4Vman

You cant ask for more if you pay less! this is a problem with society, tax cuts mean Govt spending cuts!!!
The current opposition has traditionally lobbied the electorate very successfully on this missconception: "we'll cut tax's and give you better bla bla bla etc.." They end up borrowing money to keep election promises and plunge the country into debt, then they eventually get voted out and the elected party spends the next 10 years paying off the inherrited debt instead of having more to spend on national services and improvements.
Ask for tax cuts, no problems, but you have to accept that there will be less to "go round" as a result.

I agree that tax cuts mean less government spending but they dont seem to be improving much with the billion dollar surplus they seem to get every year now. If they started doing more with public services ie more police, better hospitals, better rural support etc then Mr Costello can keep my $10 a week.

[4Vman]

Originally Posted by SIKXR8220

I agree that tax cuts mean less government spending but they dont seem to be improving much with the billion dollar surplus they seem to get every year now. If they started doing more with public services ie more police, better hospitals, better rural support etc then Mr Costello can keep my $10 a week.

Improvements take years, a new hospital for example might take 5 years from planning to completion.
As an example allot of the improvments seen in Victoria over the past 6 years were planned by the previous Govt, but who takes the credit for them?

[4.9 EF Futura]

Originally Posted by SIKXR8220

I agree that tax cuts mean less government spending but they dont seem to be improving much with the billion dollar surplus they seem to get every year now. If they started doing more with public services ie more police, better hospitals, better rural support etc then Mr Costello can keep my $10 a week.

There wasnt much fanfare about what happened (IIRC) two weeks ago. It was the day which the commonwealth paid off the last dollar of its foreign debt.

The government's borrowings peaked in 1995-1996 at $96,000,000,000 (anyone care to point out that happened in 1996 because i dont want to say it lol). That represented almost 20% of the country's gross domestic product. Pretty scary when you think about the interest payments alone. The government debt now represents 0% of the GDP. Reasonable saving on interest, no?

This is where the massive surplus has been directed and probably why you havent seen outrageous increases in spending. Personally i think they'll start saving a bit now (rainy days are ahead). But that's a massive weight off the Australian taxpayer's shoulders - i think we should probably all feel pretty good about.

Dont expect to see huge tax cuts or massive increases in spending now tho... i dont think that's really costello's style...

[4Vman]

Originally Posted by 4.9 EF Futura

There wasnt much fanfare about what happened (IIRC) two weeks ago. It was the day which the commonwealth paid off the last dollar of its foreign debt.

The government's borrowings peaked in 1995-1996 at $96,000,000,000 (anyone care to point out that happened in 1996 because i dont want to say it lol). That represented almost 20% of the country's gross domestic product. Pretty scary when you think about the interest payments alone. The government debt now represents 0% of the GDP. Reasonable saving on interest, no?

This is where the massive surplus has been directed and probably why you havent seen outrageous increases in spending. Personally i think they'll start saving a bit now (rainy days are ahead). But that's a massive weight off the Australian taxpayer's shoulders - i think we should probably all feel pretty good about.

Dont expect to see huge tax cuts or massive increases in spending now tho... i dont think that's really costello's style...

Exactly, people should take more interest in this side of things
Any surplus now avaliable for improvements or spending wouldn't be felt or seen by the population for many years to come because these things take time, unfortunatly elections have a strange habit of coming before a govt can be seen to be improving things, especially after the debt that was inherited and the more popular election issues that usually revole around smear campaigns but in reality actually mean nothing to the welfare of the country.

[4.9 EF Futura]

Originally Posted by 4Vman

unfortunatly elections have a strange habit of coming before a govt can be seen to be improving things, especially after the debt that was inherited and the more popular election issues that usually revole around smear campaigns but in reality actually mean nothing.

Indeed - politics are fickle.

[SIKXR8220]

Howard will get the boot this election just because of the new IR laws.

[4Vman]

Originally Posted by SIKXR8220

Howard will get the boot this election just because of the new IR laws.

And the stupid thing is most people who oppose them havent even the slightest clue what they really are, who they effect, how they REALLY work or what they mean.....

[SIKXR8220]

Originally Posted by 4Vman

And the stupid thing is most people who oppose them havent even the slightest clue what they really are, who they effect, how they REALLY work or what they mean.....

Yeah people have just believed everything the unions fed them in their ad campaign. While some of the changes are bad people still have their rights.

[AC/DC]

I cant see the problem with a quarter of a pecent... Surely people can find on average an extra $40 per week....

Today Tonight and A Current Affiar will call it a tradegedy,, , and it hits the battler in the back pocket, , and people will demand the government resign.... Those are the people who spend $50 a week on smokes, , $30 a week on beer, , $30 on Dog food, , and then whinge that something that HAS to happen , ,costs them $10 a week !

We never hear people thank the government when we had all those interest rate cuts !

AC/DC

[VertexZ]

I couldnt agree more. Lending companies have been given people blank cheques, ignoring their ability to repay the debt.
But it is commonly advised to allow yourself a 2% buffer. Rates have gone up .5% in the past month, so smart people should be on track there.
Of course they neglect to mention that the people who struggle also probably have new (financed) cars...

If you are smart, its not a problem.

And dont forget, wages growth is around 3-4% p/a at the moment, which on an average salary of $35k is $1000-1400 a year. I think people tend to forget about that...

[AUIIIXR8]

The gov wants us youngins to have families. How are we supposed to have children when we struggle to put a descent roof over our heads as it is. We were a dual income. I'm nearly 27 my partner is almost 29. We have our first child on the way. At our age it's what we feel is the right thing to do as we want to be able to keep up with them as they grow. Sadly we have to become a single income family. I earn reasonable money as a trademan (Timber Flooring). Good enough to live in a nice but rented house. But now theres less work and looks like the might fall out of the building industry.

The record house prices and fuel prices are a problem. They need addressed and soon. the Interest rate should have gone up months ago.

No new babies due to the younger generation not being able to find affordable living along with the baby boomer issue means trouble. Lot of trouble.

Tax cuts will only be a small band aid over a deep wound. There needs to be a more direct approach to land prices, home prices and a good alternative to crude oil based power for our transport. If demand for these items drop so will the prices.

I'm betting there is still going to be huge profits for banks and oil companies this financial year and next. I can see alot of other people and businesses having a harder time of it though.

By the way if your in my area (S.E.Qld) and want timber flooring I can help.

[gtfpv]

Originally Posted by AU2XLSV8

The gov wants us youngins to have families. How are we supposed to have children when we struggle to put a descent roof over our heads as it is. We were a dual income. I'm nearly 27 my partner is almost 29. We have our first child on the way. At our age it's what we feel is the right thing to do as we want to be able to keep up with them as they grow. Sadly we have to become a single income family. I earn reasonable money as a trademan (Timber Flooring). Good enough to live in a nice but rented house. But now theres less work and looks like the might fall out of the building industry.

The record house prices and fuel prices are a problem. They need addressed and soon. the Interest rate should have gone up months ago.

No new babies due to the younger generation not being able to find affordable living along with the baby boomer issue means trouble. Lot of trouble.

Tax cuts will only be a small band aid over a deep wound. There needs to be a more direct approach to land prices, home prices and a good alternative to crude oil based power for our transport. If demand for these items drop so will the prices.

I'm betting there is still going to be huge profits for banks and oil companies this financial year and next. I can see alot of other people and businesses having a harder time of it though.

By the way if your in my area (S.E.Qld) and want timber flooring I can help.

there we go fact not assumption !!!!!!! thanks for your post.
generally in times of growth and inflation the battlers fall by the way side and fail. and the rest plod on and end up way better off when the good times come back because interest rate rises spark inflation not reduce it. but to do this people need to be in an essential industry with job security .
today in this day and age many many more than just the tail enders will fall by the wayside if inflation spikes and it will with oil and rents and house prices increase. not sure about the house prices increasing soon though interest rates would have to go up abit and inflation would have to take affect 1st. the stick in the mud in this age is the new " IR LAWS "
the 2 dont go together job security and wages growth always followed inflation and interest rates in the past. but not any more. we are in new territory.

[Mutley]

House prices are a combination of the relative wealth and borrowing capacity of a population and the scarcity of housing blocks. Most peoples financial problems today will centre around the cost of servicing the loan of the house they live in, which when the mortgage is reduced, becomes their greatest asset and security.

In many parts of Australia, I think houses are over priced. If rates continue to rise, there will be a correction in house prices. It may not hurt some people in some rural areas so much where there is near full employment and you can still buy a 4 x 1 brick home for around $100,000. This may inturn lead to some decentralisation of the population. But I suppose this would require a lifestyle choice.

[Work Horse]

I guess any thread about interest rates is going to involve a political discussion. Which inevitably brings out veiws that are blinded by dogma. This can degenerate into personal attacks. It will help if everyone understands this is just my humble opinion, and what they post is just their humble opinion.

It's important to remember that there are no scientific rules governing the economy. No cause and effect, no proven formula for knowing what will happen in the future. Experts still argue over why things happened in the past. The economy is very complex, everything effects everything else. It is possible to over simplify things to the point that they become meaningless.

The government does not set interest rates the Reserve Bank does. Both major parties went to the last election claiming they could control interest rates. IMHO neither can, much of the reserve banks decision is based on things outside of the Australian governments control. So holding a government responsible for high/low interest rates is not understanding what is actually going on.

So if no one knows for sure where interest rates are going how do you know how much to borrow? Personally I looked at the history of interest rates. The average for a 25 year loan is 8%. So this is what I budgeted on when buying a home, as opposed to an investment property.

My sister worked in the Supreme court during the last down turn. They went from processing a few foreclosures a week to dozens a day. She told me the reason for people finding themselves in this situation was almost always borrowing too much money. "Those who choose to ignore history are destine to repeat it".

If anyone is feeling the pinch now with 1/4% rise, restucture your finances now and prepare for worse! I hope I'm wrong but history is the best indicator IMHO. You can remortgage your home over a longer period which will lower your payments, and give you some space. You can down size, selling your current house for a cheaper one and a smaller mortgage.

If you are struggling now don't put this off, or wait and see what happens. Ten's of thousands did last time and lost everything. See your morgtage provider or a financial planner about what you can do now!!

Don't be fooled by the dogma that it couldn't happen under a conservative government. For their part the first home owners grant and the middle class welfare of negitave gearing have helped pushed house prices to the levels we find them.

If the proposed tax cuts go ahead they are in exactly the opposite direction the reserve bank is trying to take the economy. This can only increase the pressure on the reserve bank to increase interest rates again in the future.

The government has already "sold the farm", for us. It's time to put people above profit, I'm not sure they can get past their own dogma or have the stomach to do it. "Blow you Jack I'm OK" will get you elected while things are good. Telling families who lose their homes you have little sympathy for poor financial planners may not.

[brenx]

$68 increase for me. Nothing to be concerned about. S**t happens.

AU2XLSV8 : The GST was supposed to take place of stamp duty on housing etc. Gov't are greedy haven't abolished it. So that add's to the cost of buying a home. Once they abolish the stamp duty? Apparently it's happening soon? House prices will be effectively cheaper.

[XA-Coupe]

I started to edit this thread but it got too much.
People need to start divorcing their own political views from this forum.
It *is* possible to discuss interest rates without getting into a general political sligning match although I see some people take every opportunity to get a sly one in.
I am getting sick of these threads degenerating .. and I'm not looking forward to the next state/federal elections and the threads that are going to start then.
This is a Ford forum first and foremost, other discussion is encouraged but not if it becomes a negative influence.

Show respect to others and keep it on topic.

[4.9 EF Futura]

Originally Posted by Work Horse

The government does not set interest rates the Reserve Bank does. Both major parties went to the last election claiming they could control interest rates. IMHO neither can, much of the reserve banks decision is based on things outside of the Australian governments control. So holding a government responsible for high/low interest rates is not understanding what is actually going on.

First off - that was a great post IMHO, WH. I wish i could be so articualte!

The point ive quoted there is probably open for interpretation IMO... yes the RBA sets target rates independently of the government (as independently as they can being directly accountable to the government).

The activities of the RBA are in response to the economic environment which is prevailing. Obviously the government has a strong influence on this.

Poor economic policies will have adverse effects on inflation which will in turn see the cash rate lifted. A government should be held accountable for this. If you want to be the voter's "friend" by cutting taxes, going on a spending spree and promoting minimum wage conditions which do not reflect the workforce's productivity... expect to create inflationary pressures and expect to see the economy have a steep correction. Alternatively, take a cautious approach and maintain a steady economy with low inflation and the inevitable downturn of the cycle (this correction CANNOT be avoided) will not be too rough - because the economy wont have "gotten away" from you.

In the same vein as your comments that an individual needs to act now, restructure their financial position before the faeces hits the fan... IMO... can be applied to the way which a government 'guides' the economy for which it is ultimately responsible. A big part of this is ensuring that the wage environment reflects the productivity - but I wont go there.

Lol, an associate of mine puts it well when discussing rural banking clients of his - "you gotta know when to put away the steak and get out the sausages".

This, in my opinion, is where we encounter a problem.

Everyone wants to keep the wage growth going - everyone wants interest rates to stay put - no one wants to give anything up... I guess because we've all had it pretty good for a while now... and during the good times we've been busy increasing our standard of living instead of preparing for the inevitable rainy day... now im not a religioius person myself but i understand that's the jist of Kane and Able...

[max]

Good across-the-board view there Work Horse. Yes these kinds of discussions become robust and border on hysteria at times. Everybody has a situation pertaining to their own circumstances. Their is an academic argument for all angles on this subject. I simply feel that today's society consumes on the basis that 'we want it now, why wait?' You could not blame people getting up to the hilt in debt in say, 2002 to buy a house for $200K. Today that house is probably worth $500K. They would not be able to afford to buy if they left it till now. I think the poor performance of the share market in the early 2000's led to investors turning to real estate and that had an impact on the rapid rise in property prices, coupled with the hype of media presentations like 'Hot Property'. Nevertheless Australian's have always been in love with home ownership and it is little wonder. It proves time and time again to be the soundest investment, because you get to live in it(you have to live somewhere) and enjoy making improvements to it for the whole family to benefit from. I am just aware that interest rates rises also affect those who have to borrow to maintain an enterprise and run a business where margins are getting tighter all the time and with globalisation, competition is tough, and business infrastructure upgrading is crucial to maintaining a competitive edge. Small business accounts for a lot of employment, and marginal businesses may reach a point where rationalisation has to occur and jobs will be lost. Nobody wins in these situations.

[ronwest]

Originally Posted by 4Vman

And the stupid thing is most people who oppose them havent even the slightest clue what they really are, who they effect, how they REALLY work or what they mean.....

glad to see you've got yourself a clue since you posted the following

Originally Posted by 4Vman

Firstly the new IR laws only affect businesses with 200 or less employee's, so nothing's changed as far as his rights go.

[Work Horse]

Originally Posted by XA-Coupe

I started to edit this thread but it got too much.
People need to start divorcing their own political views from this forum.
It *is* possible to discuss interest rates without getting into a general political sligning match although I see some people take every opportunity to get a sly one in.
I am getting sick of these threads degenerating .. and I'm not looking forward to the next state/federal elections and the threads that are going to start then.
This is a Ford forum first and foremost, other discussion is encouraged but not if it becomes a negative influence.

Show respect to others and keep it on topic.

Sorry Jeff I'II be good :

But they started it, did you hear the...... :

Calm blue sea, calm blue sea

[XA-Coupe]

Originally Posted by Work Horse

Sorry Jeff I'II be good :

But they started it, did you hear the...... :

Calm blue sea, calm blue sea

careful stu or I'll take that blue bottle away from you and all your fun will be gone !! :evilsasmo

[Work Horse]

Originally Posted by XA-Coupe

careful stu or I'll take that blue bottle away from you and all your fun will be gone !! :evilsasmo

I'll be good, I'll be good!!!!

[SSBUB]

i agree that the housing/property sector is currently overpriced, particularly where im in at Perth. I have bought a parcel of land near the beach for 185k. The titles wont be ready until Jan next year. I am hoping that stamp duty is somewhat reduced by then (even thought its only 4-5k, its still a saving).
Im also hoping there is some common sense brought back in to the builders asking prices of houses!!
but i think i ask too much...in any event, the increase in interest rates should have happened some time ago.

[Walkinshaw]

Wow, i wonder what sector Martin works in *durhhhh*